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UNITED STATES OF AMERICA. 



TWO ESSAYS 



ECONOMICS 



JOHN BORDEN 




CHICAGO. 

S. A. MAXWELL & CO. 

134-140 Wabash Ave. 

i8go. 









COPTRIGHT 1890. 
BY JOHN BORDEN^ 



CONTENTS. 

I. WEALTH, - - Pages i to 75. 

II. AMERICAN MONEY, Pa(;ks 77 to 139. 



WEALTH. 



I. 

DEFINITION AND UNIT. 

According to the common and general opinion anything 
is wealth which admits of ownership and has a money value. 
If a man possesses anything which has no money value; or, in 
common parlance is not worth a cent, it is not wealth. But if 
he can sell it, he infers that it is wealth although he may be 
ignorant of the cause of its value. As for instance, one may 
gather ginseng and sell it, and therefore regard it as wealthy 
although he may have no knowledge of its virtues — if indeed 
it has any. The word wealth as commonly used is the name 
given to each one of a class of objects, which answer to the 
above definition separately, and also, to the entire class col- 
lectively. As the word is often used it implies abundance, 
affluence, opulence, riches; but quantities are comparative, 
and under the definition (Webster) is quoted the expression, 
I have little wealth to lose (Shaks). Therefore, it is proper 
to use the word to designate a thing as wealth, or as belong- 
ing to a class of objects so called, whether the quantity or 
value of the article is great or small. 

The above definition requires that all objects, which are en- 
titled to be called wealth, must possess a value common to 
them all, and which is called money value. This definition, 
although it is directly deducible from the actual use of the 
word, wealth, demands for its elucidation an explanation of 
the word value, and especially of money value. 

Anything which is either necessary, useful, or agreeable to 
a man has value to him. It has utility to hira — utility being 
the state or quality of being useful (Webster). The man has 
a desire, or want (a demand) and the thing has a capacity to 
satisfy it (a supply). Therefore, the thing has utility to 
him; it possesses in itself a capacity to satisfy his desire or 
serve his purpose, and he furnishes the desire or purpose. 
Utility, therefore, expresses a relation between a person and 



2 WEALTH. 

an object, or more generally, between a desire or purpose 
and the capacity to satisfy it. Use value or value in use, are 
phrases, which, as defined by their inventor (Adam Smith), 
express or signify the utility of the object or thing referred 
to. If a thing has utility it has a use value, and vice versa. 
The two words are synonymous. One expresses the relation 
objectively and the other subjectively. 

In order that utility or use value may exist, there must be a 
desire or purpose and also the means to satisfy it. Water has 
no utility to quench thirst unless there is thirst, nor fire to 
ward off cold unless there is cold. Food has the capacity to 
appease hunger if it exists — But food has no utility or use 
value for that purpose if there is no hunger. By chemical 
analysis a comparison may be made of the nutrition contained 
indifferent kinds of food. And thereupon it might be said that 
one kind had more utility for that purpose than another. But 
although horseflesh may be as nutritious as beef or mutton, 
yet to those who want or desire the latter, they have a greater 
use value. In food, and in everything else, the consumer ex- 
ercises his choice, and the thing which he prefers has the 
greater use value to him at that time. The intrinsic prop- 
erties which a thing has or is supposed to have and which en- 
able it to be useful would continue to exist if mankind were 
extinct, but in such case the thing would have no utility or use 
value because there would be no wants to satisfy. 

It has been said (Cairn es) that, utility has been understood 
to mean the quality of being suitable for human purposes 
generally, and the degree of utility to be measured by the im- 
portance of the purposes to which the useful commodity min- 
istered; as, that water is more useful than alcohol; coal than 
a diamond; and iron than gold. It may be true that water 
is more useful to quench ordinary thirst, or for washing, cook- 
ing, irrigation or navigation than alcohol, yet the latter is 
more useful than water for many important purposes in the 
arts and in medicine. Coal may be more useful to generate heat 
than diamonds, and the latter more useful to cut glass, point 
a mining drill, or for ornaments, than coal. Iron may be 
more useful for horse shoes and many other purposes than 
gold; but gold is more useful to plug a decayed tooth and for 
many other purposes than iron About the comparative im- 
portance of many of these uses opinions might differ. But 



WEALTH. 3. 

it is obvious that the above meaning loosely given to utility 
is too indefinite and fails to bring into view the true signifi- 
cance of the word; because "the quality of being suitable for 
human purposes generally" depends upou the existence, na- 
ture, and amount of human wants, as well as upon the capa- 
city to satisfy them. 

Since utility and use value depend for their existence upun 
wants (the demand) and the means to satisfy them (the supply)^ 
and both of these vary, then it follows, that utility and use 
value are variable and not constant quantities. 

The capacity to be useful may vary. 

1. It may be lost in whole or in part, the food may spoil or 
decay; the air become foul; the water stagnant; the bouquet 
may wither; the gem become cracked, broken, or lose its lustre; 
the watch cease to keep good time; and the goods may deterio- 
rate, get out of style and become old stock. The capacity to be 
useful may not exist in fact, but be only imputed to the object; 
the patent medicine may not be a panacea in reality; nor the hair 
restorer a restorer in fact; and the picture or gem maybe bogus. 

2. The quality of the article may vary; the cloth may be 
homespun, shoddy or fine goods. All kinds of articles vary 
through all degrees of quality. 

3. The quantity may vary. The supply maybe scant or the 
contrary. Crops may be short or over abundant. It is some- 
times reported that in remote localities Indiaii corn is, or has 
been used for fuel. Although the corn had the same nutri- 
tive properties and would make as much whiskey, glucoj<e, 
starch, or food, as if it were ia the greatest demand for these 
purposes, yet situated where it was, the corn had greater util- 
ity to its owners for fuel than for any other purpose. The caj^a- 
city to satisfy a desire or serve a purpose may exist in excess 
of the desire or purpose which it can satisfy or serve. In such 
cases the utility of the object becomes reduced in amount as 
per unit of quantity, because the supply exceeds the demand. 
If a farmer raises more grain than he can possibly consume, 
the excess has no utility to him except to sell to others; and 
if there are no buyers, the farmer may well turn his grain 
into fuel. Commerce confers or enhances utilities by trans- 
ferring commodities from one place to another, and thus 
bringing the supply within the reach of an adequate demand. 



4 '' WEALTH. 

The producer receives for liis product, on the average, less than 
one-half of the price paid for it by the consumer. Those en- 
gaged in trade and commerce get at least an equal share. 
Hence the wealth gained by commerce. 

And utilities vary as wants vary. 

1 , They vary as between tlie same person and the same thing. 
A man may be more hungry or thirsty at one time than another. 
Clothing has greater utility to a man who has none, than if he 
bad a sufficient supply already ; the surplus quantity would have 
little utility to him except to sell. Thus a thing may vary in 
utility in respect of the purpose for which it is wanted. 
Water has one utility to quench thirst and another for wash- 
ing or cooking. 

2 They vary as between the same person and different 
things. Either food, clothing, shoes or drink may be more 
useful to a man at one time than either of the others. 

.3. They vary as between the same thing and different 
persons. One may desire food or drink more than another. 
A commodity has one use value to the producer, maker, mer- 
chant or dealer and another to the consumer. If an article is 
saleable at a profit, that constitutes its utility to the dealer. 
If the article thus serves his purpose, it is not material to 
liim what use value alcohol, tobacco, opium or any other com- 
modity may have to the consumer. 

4. They vary as between different persons and different 
things One may want shoes more than clothing, and an- 
other, just the reverse. And all of them may desire money 
in different degrees more than any other thing. 

Many things as goods, chattels, lands, etc., have a use value 
to many persons in different degrees both as between the 
things themselves and also as between the several persons. 
Hence such things which are capable of delivery or transfer, 
become exchangeable between those persons to whom they 
have a use value, because of their greater utility to one or 
more than to others. Such things, therefore, are said to have 
exchange value. 

From the foregoing, it is inferrable that the phrase, use 
value, isthe proper generic term for value, and that any specific 
kind must be use value in some modified form or taken in 
some limited or qualified sense. If, therefore, all kinds of 
wealth possess a kind of value common to them all and which 



WEALTH. 



may be called wealth value, then the same is in fact use value 
qualified or limited in some way. The definition of wealth 
above given asserts that wealth value is the same as money 
value; and the proof of it is as follows: 

Since wealth may be more or less in quantity, different arti- 
cles and quantities of wealth admit of comparison with each 
other as to their amounts. Therefore, if a certain article or 
quantity of a thing which is in fact wealth be denoted by, d\ 
and a speci6c article or quantity of some other thing be denoted 
by w; and the two are brought into comparison and it appears 
thereby that the two articles have the same kind of value, 
then it follows that the article or quantity, w, possesses wealth 
value and is therefore wealth also. The result of such com- 
parison is, that the two articles or quantities, w and r?, are of 
equal or different amounts in value, which relation can be 
expressed algebraically by 

%0—v.d (1) 

which is the same as to say that the article or quantity w is 
worth or possesses a wealth value v times as great as the arti- 
cle or quantity d. 

And another article or quantity of some other thing denoted 
by, z, if wealth, gives rise to the relation expressed by 

z=v^.d (2) 

and so on, for all other articles or quantities which may be 
brought into comparison with d and thereby found and 
proved to be wealth also. 

In this manner the article or quantity of wealth, d, fur- 
nishes a test whereby all other articles of wealth may be 
known and identified. 

And the article or quantity of wealth, d, also furnishes a 
unit measure of wealth and wealth value. For if in Eqs. (1) and 
(2) it be assumed that wj=2=f?. then ^j=yj=l. That is to 
say, if the specific article or quantity of wealth, d, is taken as 
the unit of wealth, then its value is unity, or the unit of 
wealth value. 

Now suppose the two articles or quantities of wealth, w 
and s, were directly compared with each other, and the rela- 
tion between them were found to be as expressed by 

w= v.yZ (3) 



6 WEALTH. 

then the article or quantity, w, as wealth, is v^ times as 
great as the article or quantity z. If w. denoted a horse, and 
z a sheep, and if ^2 = 10 then the relative wealth value be- 
tween the horse and a sheep would be as one to ten. And an 
exchange of the horse for the sheep might take place upon 
that basis. The owner of the horse would consider the ten 
sheep to be of greater utility or to have greater use value to 
him than the horse, and the owner of the sheep would con- 
sider the horse of greater utility or use value to him than 
the sheep. Hence the exchange. In this and every 
similar case, each party measures for himself the util- 
ity or use value to him of the article parted with and 
also of the one received. And in his opinion he has gained, 
or at least not lost, by the transaction. Experience might 
prove that both were correct in their opinions, or that one 
was mistaken, or that both of them were. So that in ex- 
changes, both parties may gain, or one lose, or both. 

An exchange made as above fixes a degree of exchange 
value or ratio of exchange, between the article exchanged. 
It furnishes a measure of their relative utility, but only, how- 
ever, as between the parties to the transaction. Their relative 
utility might be estimated very differently by others; and 
indeed the respective use value to two other persons, both of 
the horse and the sheep might be very different from that to 
the two former ones. The new or second owner of the horse 
might refuse to exchange him for less than eleven sheep or 
more; or, a new or second owner of the sheep might refuse 
to give more than nine sheep for the horse. And the degree 
of exchange value or ratio of exchange of the horse or sheep 
would vary with every other or different article of wealth 
with which either might be exchanged, and also with every 
change of owners of each. 

Although some one might assert that water is more useful 
than alcohol; coal, than adiamond; and iron, than gold; yet in 
an exchange, the bystanders have no part, although they may 
volunteer their opinions. The parties to the exchange meas- 
ure the utilities involved for themselves. And each of them 
may decide that for equal weights or quantities, alcohol is 
more useful than water, diamonds than coal, and gold than 
iron; at least, to them in their then condition and circum- 
stances. 



WEALTH. 7 

It seems therefore, that those things which have utility to 
more than one person and are transferable, possess exchange 
value; and that the degree of exchange value or ratio of 
exchange existing among them is determined by the ex- 
changes which take place between them. 

If the quantity, c?, be eliminated between Eqs. (1) and (2), 
the result is 

Thus, the test and common measure of wealth, c?, furnishes 
also a medium of exchange between all other articles or quan- 
tities of wealth. For in the case above supposed, if the horse 
had been parted with for 100 t? and the ten sheep acquired 
for 10 c?each, then the ratio between the horse and sheep is the 
same as that above supposed to exist in a direct exchange made 
of them. 

Anything which is generally conceded to be wealth and 
which is in common use as a test and common measure of 
wealth and as a medium of exchange is called money. Such 
thing need only to be wealth among those who use it, as or- 
naments, etc., (Wampum), or it may be gold, silver, copper 
or other metal. All money is composed of something which 
is wealth among the people who use it, unless for convenience 
(small change) or by necessity, force, or fraud, something else 
is substituted as a representative or token for it. 

If money were made out of something which had no value 
and consisted of mere counters, then it could not be said, that 
wealth consists of all those things whose value can be meas- 
ured by money. For if the money had no value, how could it 
measure value in other things? Clearly not otherwise than 
inferentially by effecting exchanges between them. Such 
money would in that manner acquire a utility for that purpose 
merely by reason of its being a forced currency. 

The assertion made by Eq. (1) is that v' is worth v times 
as much as d. This could not be unless d had value. And 
the Eqs. (1), (2) and (4) show that the operation of d as a 
medium of exchange rests logically upon the averments that 
the value of ic is v times greater than the value of d, and 
that the value of z is v^ times greater than the value of d. 
Therefore all mere counters used as money are representative 



WEALTH. 



of something which is in fact wealth, or if not they are cheats 
and frauds imposed by force upon an unwilling people. 

But if money is made but of something which is itself 
wealth, and especially out of some uniform and durable 
material having a great use value to all the world and which 
remains stable and permanent; as for instance, if the money 
be made out of gold or silver; then the above proof that 
w^ealth value is money value is sound and correct. And 
if the article or quantity, d, were a specific amount 
by weight of one of the precious metals, then it be- 
comes, as proved by common use and experience, a fair test 
and unit measure of wealth, and the value of such unit be- 
comes the unit of wealth value. If wealth consists of sundry 
things possessing utility, or of the utilities themselves, it is 
obvious that it is measured by measuring its utility or value. 
Wealth is not measured by measuring its weight, or its super- 
ficial or cubic contents. As wealth, gold measures one 
amount and iron or lead another. As between different 
quantities of a commodity, all of the same quality, as for in- 
stance, grain or cloth, the value would probably increase in 
proportion to the quantity within certain limits; but not so as 
to different amounts of the same article, if they all differed 
in quality. And the precious metals each of which are always 
uniform in quality when pure, are about the only things whose 
value increases regularly in proportion to quantity to an unlim- 
ited extent. Although wealth may be more or less in quan- 
tity, yet its amount does not depend upon area, magnitude 
or specific gravity; a lump of coal does not measure the same 
amount as wealth, as a diamond of the same size; and one 
horse may be worth many times more than another; if fastfT, 
stronger, younger, more beautiful, or otherwise more desirable 
than the other. Also amounts of wealth are not measured 
by measuring capacities to be useful; as for instance, corn so 
abundant as to be used for fuel; or fruit so abundant as to be 
left to rot on the ground; or sheep in Australia when nothing 
was saved except the fleece and tallow; or cattle in South 
America and elsewhere when nothing was saved except the 
hides, horns and tallow. And when Sinbad got into the pit 
or cave of diamonds their capacity to be useful would have 
figured small to him, if he had not found a means of escape. 

It is said in the law (2 Blacks. Com. 446) "A sale or ex- 



WEALTH. 9 

change is a transmutation of property from one man to another 
in consideration of some price or recompense in value; for 
there is no sale without a recompense; there must be a quid 
pro quo. If it be a commutation of goods for goods, it is 
more properly an exchange; but if it be a transferring of goods 
for money, it is called a sale; which is a method of exchange 
introduced for the convenience of mankind, by establishing a 
universal medium, which may be exchanged for all sorts of 
property; whereas, if goods were only to be exchanged for goods 
by way of barter, it would be difficult to adjust the respective 
values, and the carriage would be intolerably cumbersome. 
All civilized nations adopted therefore very early, the use of 
money." 

In a sale the sum of money paid is called the price for which 
the thing is sold. Its money or wealth value is thus measured 
by the number of times such value is greater or less than the 
value of the money unit. The difference between the price 
and the money value of an article, is the difference between a 
sum of money and its value. If the money is of the right 
kind, a sale is in substance an exchange, in which each party 
receives full satisfaction. But if the money were mere 
counters, then the payment of money, although in pointof law 
it would operate as a satisfaction, in reality only operates as 
a means to obtain future satisfaction through the redemp- 
tion of the counters, or by their use in subsequent pur- 
chases, provided they were so used in time and before they 
lost their representative or putative value. 

A sale measures the relative utility of the article sold and 
the price paid for it to the buyer and seller as estimated by 
each of them for himself. The sale signifies that, the sum of 
money received has as much or a greater use value to the seller 
in his opinion than the article sold; and also, that the buyer 
considers the article bought as of equal or greater use value to 
him than the price paid. Each party works for his own 
interest in the transaction; and it is a source of grief to the 
seller to learn afterwards that he might have sold for more 
and to the buyer that he might have bought for less. The 
extreme price which a buyer will pay for an article is a sum 
of money whose use value to him in his opinion is equal to 
that of the article bought. And he regards all forestalling, 
regrating, engrossing and combinations to extract a famine 



10 WEALTH. 

price out of him as unjust and illegal; on the other hand, 
the lower the price may fall the better it suits him. As to the 
seller, he will not dispose of an article, unless the use value of 
the price paid is to him in his opinion, at least equal to that 
of the article sold. If such article is a surplus product to him, 
or of no utility to hini except to sell he has a wide margin; 
but the shoe pinches at any price below its cost to him. If 
a hatter had on hand a stock of hats he could not use more 
than a few of them himself; the others are for sale. If every- 
body chose to wear caps or turbans, the surplus stock of hats 
would have small utility. But if there are buyers, the higher 
the price the better it suits the hatter. If there is competi- 
tion in the business, or for any cause the demand falls off, the 
stock is liable to remain upon his hands and deteriorate in 
quality, get out of fashion and lose style and polish. As time 
progresses, he is ready to dispose of the lot on hand at what 
he calls a bargain. If his entire sales renumerate him to his 
satisfaction he continues in the business. 

From what has been said already, it must be apparent that 
wealth value is use value as measured in barter by the ex- 
change, and in sales by the value of the sums of money paid. 
And, since barter is not now in common use, the general 
practice among all men is to estimate, measure and compute 
wealth and its value in terms of the money unit and its value. 

Wealth values are ascertained by market prices, of which 
there are two kinds, wholesale and retail; the latter less fixed 
and greater, often double the former. And there are different 
prices both wholesale and retail at different times at the same 
place, and also at different places at the same time. Any 
article of wealth measures one amount at one time or at one 
place and a different amount at another time or at another 
place, although the quantity and quality of the article may 
remain the same. As .for instance, a thousand bushels of 
grain, regarded as wealth, measures one arpount on the farm 
and another in the market, and also different amounts at either 
place at different times. The farmer who sells his grain at a 
railroad station in his locality gets a smaller wholesale price 
than is paid for the grain in New 'York, Liverpool or other 
market. And so in like manner as to all other things. And 
any specific article is likely to measure one amount in one 
sale and a different amount at a prior or subsequent one. 



WEALTH, 11 

A market tends to establish continuously one price at one 
time and place for every article of a specified grade and 
quality dealt in at that market. One set of dealers represent 
Supply, i. e. a supply of a commodity and a demand for 
money; another set represent Demand, i. e., a demand for 
the commodity and a supply of money. And the market, 
is composed of buyers and sellers. 

The market price is arrived at, by an equation between the 
demand and supply, both of which are continually affected by 
a variety of causes, real, speculative or imaginary. And the 
equation is brought about substantially as follows: The 
amount of a demand has a relation to the price bid; so also, the 
amount of the supply to the selling price. Hence if the quantity 
demanded of an article be denoted by D at the price v^.d 
per unit of quantity, d being the money unit; then the 
total cash amount of the demand is D.v^.d. And if the 
quantity of the same article offered for sale at the price v.d 
per unit of quantity be denoted by S, then the total cash 
amount of the supply is S.v.d. Now the quantity demanded 
varies or tends to vary inversely with the price v'^ .d; and 
the amount of the supply varies or tends to vary directly 
with the price v d. And transactions occur when 

S.i).d:^D.v\d (5) 

The total quantity bought and sold is the same and at the 
same price. At this point any quantity large or small may 
change hands. If the demand at that price is in excess of the 
supply it avails nothing; the only way to increase the supply is 
to bid up the price. Then the additional supply would sat- 
isfy the most urgent demand, whereupon it would become less 
and the price bid would consequently relapse. On the other 
hand an excess of supply avails nothing after the demand is 
satisfied unless the price is lowered. . This would excite an 
additional demand which would reduce the amount of the 
supply, upon which the price rises and then the demand falls off 
and the price relapses. Thus the market price continually 
fluctuates in unstable equilibrium. 

Market prices at the leading markets of the world fix ap- 
proximately all wealth values of the chief or staple commo- 
dities for the benefit of all concerned, whether producers, 



12 WEALTH. 

dealers, or consumers. And the wholesale price of an article 
is often quoted to the fraction of a cent, penny, etc. 

If any one brings an article to market this implies that 
to him it is a surplus product or that it has a less use value to 
him than its price. He may have made or manufactured it if 
a producer, or if a dealer he may have bought it previously 
in order to sell again. In every case it costs him a certain 
amount in money or in money's worth. Unless the price real- 
ized exceeds this, his livelihood is affected, or at the very 
least his profits. If the article is not wanted at all or is a 
"drug" in the market, it is in vain for the seller to expatiate 
upon its capacity to be useful, or upon its cost to him. The 
buyer considers in connection with it the use value of his 
money to him, for. that represents his livelihood and his profits 
made and to be made. If the article is wanted then its price 
is affected by the quantity of the commodity which is offered 
for sale and the quantity of money which buyers are ready to 
invest in it. And a sale takes place. 

1. When the seller thinks he cannot obtain more from the 
the buyer with whom he is dealing, or from any other. 

2. When he wants the price more than he wants the 
article. 

3. When the buyer thinks that he cannot buy the article 
for less from the seller, or any one else. 

4. When he wants the article more than he wants the 
price. 

Every sale is a separate transaction, but it is one of many 
which go to make up what is called the market price, which 
is an average. The man who sells at the highest price and 
buys at the lowest is the "smart man," the successful dealer. 
In a market everyone is on the alert to do the best he can; 
for success in life or business awaits the final result. 

There are not only "sales" but "contracts to sell." A sale 
occurs where the seller has the article on hand. A contract 
to sell is where the seller expects to procure the article before 
the time stipulated for its delivery. As for instance the Gov- 
ernment advertises for supplies for the army, navy, etc., to be 
delivered at certain places at certain times or from time to 
time, and contractors bid and afterwards, if successful, procure 
the articles required. 



WEALTH. 1 3 

In a market, some dealers sell for future delivery, — 
sell short; because in their opinion the price will fall in 
the meantime. These men are the bears; they work in 
the interest of the consumer-. Others buy for future de- 
livery because in their opinion the price will rise; they are 
the bulls; they work in the interest of the producer. The 
bears also sell for immediate delivery in oi'der to break 
down the market price; the bulls buy for cash and some- 
times get overloaded; and sometimes they corner the bears: — 
when the time comes to deliver, "the shorts" find that the 
other side has monopolized the supply, and put up the price. 

The benefit conferred upon the community by a market and 
especially by the professional dealers therein, may be illus- 
trated by an example. Many years since, a person, then a 
young man tried farming. The crop was raised and for sale. 
On enquiring the price he was told that corn was worth from 
twenty to twenty -five cents a bushel. On looking about for a 
buyer, he found one at the higher price who would buy on credit. 
The sale was made and the corn delivered — and it was never 
paid for. Then there were no boards of trade, nor bulls nor 
bears. Now the price of corn, or, indeed, of any commodity, 
is fixed in a market to the fraction of a cent for cash or future 
delivery. The farmer may sell his gi-ain for cash or at price 
already well fixed and settled for future delivery and receive 
cash on delivery for any amount he may have to sell no mat- 
ter how great. That is to say, the farmer can sell his grain 
ahead and deliver it afterward. The so called "Farmers' 
Alliance" is opposed to all dealing in futures. After the 
farmer is in the market with his products he must sell. 
And in an early day in Chicago, he sold for truck and 
trade, and was at the mercy of the buyer. It would be 
absurd to say that a miller who made thousands or even 
hundreds of barrels of flour per day should not be allowed 
to contract ahead for barrels, sacks, grain, etc. The person 
above referred to, lately asked a farmer located hundreds of 
miles away from Chicago, how he knew what price he ought 
to receive for grain, cattle, hogs, etc. And the reply was 
that we get the Chicago market reports. The "Farmers' Al- 
liance" would have the market consist exclusively of bulls. 

If one versed in political economy should propose to oper- 
ate in a market, as for instance in ^rain; after he had fixed 



14 WEALTH. 

upon its natural or just price by a reference to the amount of 
labor required for its production, or tlie amount of labor 
wbicli it would command in exchange, or the amount of labor 
which it would maintain, or in any manner estimate the cost 
of its production, it would be necessary for him also, pre- 
viously to consider the state of the market as to the demand 
and supply and "facts" like the following taken from a 
Chicago newspaper of date Mai'ch 23, 1890. 

"Late yesterday. May wheat (No. 2 Spring) sold on the curb 
at 80|c. "Puts" were quoted at 80-J @ 80:}c, and "calls" at 
80|- to 81c. G. K. & H's. private wire dispatch from New 
York reported the clearance from four jjorts for the week at 
641,900 bu. of wheat, 2,890,750 bu. corn, 281,600 pkgs of flour, 
and 417,850 bu. of oats. These figures show an increase for 
the week in wheat of 82,750 bu, 

W. G. McC. & Co. say : Every indication shows that the 
shorts in wheat are about covered and that the buying of the 
3ast twenty-four hours has been almost exclusively for long 
account. We look for^ still further reaction Monday, but 
would buy on all breaks. 

C. B. Co.'s, market letter says: Our market closed heavy 
at bottom prices, with the shorts well covered. New York as- 
sures us there islittleprobability of further large clearances for 
some time to come, and crop damage reports are contradicted 
or said to be local and insignificant, while the idea of mani- 
pulation is less generally believed; and our own examination 
into the matter induces us to think that there is no line of 
long wheat held by any man or any set of men who can, with 
their present holdings, control prices. The country are quite 
bullish and have made some money on the up turn, and those 
who have sold out, will for a time buy back on the breaks, but 
it looks to us as if the up turn had reached its summit, and 
the general tendency for the coming week will be in the di- 
rection of lower prices. 

G. K. & H.'s market letter of Saturday says: Reports of 
-damages to the wheat crop continue to come in, but now that 
the short interest has covered so freely, they have temporarily 
less influence. A further downward reaction seems i^robable 
for the immediate future. Thereafter we look for renewed 
buying and improvement based on good cash demand for old 
wheat, or on crop scares, or both. 



WEALTH. 15 

The shipments of rye from Russia from Aug. 1 to Feb. 22 
were about 21,436,000 bu., against 38,21(3,000 bu. for the cor- 
responding time in 1888-9. 

English farmers' M'heat deliveries the last week M^ere 81,271 
qrs. the average price being 29s. 8d. 

The quantity of wheat in bond in the French ports March 1 
was estimated at 4,000,000 bu. as against 11,440,000 bu. 
March 1, 1889. 

Beerbohm of March 7 says: The stock of wheat at Odessa 
is variously estimated at from 4,000,000 to 8,000,000 bu., but 
there is no official or entirely reliable return; seeing, however, 
that the official stock Jan. 1 was 11,328,000 bu., the present 
stock is probably not far short of 8,000,000 bu. 

The receipts of flour and grain at Chicago for the week 
just closed were equal to 3,804,373 bu. and the shipments 
equal to 2,877,000 bu. 

Statistician Dodge in his March report to the agricultural 
department says the impoverished condition of American 
farmers is due to overproduction. 

Beerbohm of March 7 says: The crop reports •from the 
Punjab are by no means favorable, and it is now pretty clear, 
taking into account the largely reduced acreage, that like last 
season, India will be a comparatively small contributor to the 
world's wheat supply. 

Clearances of wheat from New York Friday were 67,571 
bu. to Oporto and 222,902 bu. to Lisbon. 

Minneapolis millers complain of the poor demand for flour. 

The shipments of wheat from Russia from Aug. 1 to Feb. 
22 were about 44,784,000 bu. against 62,192,000 bu. for the 
corresponding period in 1888-9. 

The London Daily Chronicle of March 3, says: The ravages 
of rust on the wheat crop has been more severe than was at 
first anticipated. It is estimated that in South Australia, the 
loss to the farmers amounts to at least $5,000,000; in Victoria, 
$2,500,000 to $3,000,000; and in New South Wales to $2,- 
500,000. 

Bradstreet says: There is a strong point worth noting. 
July 1, 1889, stocks in the United States were at a low ebb, 
and not up to the customary average abroad. As a matter of 
fact, the grand total of available wheat stocks in this country, 
plus stocks of wheat afloat for Europe, United Kingdom 



16 WEALTH. 

stocks at Odessa, French ports, Paris, Berlin, Danzig and 
Stettin amounted on July 1, 1 889, to 67,328,000 bu as compared 
with 83, "792, 000 on the like date in 1888. March 1, 1890, the 
grand total of American and European stocks and stocks 
afloat for Europe were 95,842,000 bu. and had been declining 
for two months at the rate of 10,000,000 bu. per month. If 
this rate of decline be continued during the four months end- 
ing June 30 next, the indicated total of American, European 
and afloat stocks at that date is 56,000,000 of wheat, or ] 1,- 
000,000 bu. less than on July 1, 1889." 

If one should decide, from snch reports or otherwise, that 
the relation between the supply and demand would justify 
either buying or selling he would easily And others ready to 
accommodate him. 

In view of what precedes it appears, that the money test and 
measure of wealth, in common use everywhere, stands upon 
correct logical and scientific grounds. And this result is 
reached by practical men without any abstract speculation or 
metaphysical inquiry beforehand, into the nature and 
causes of value, or any search at all into the subtle motives 
of human desire. After the different kinds of wealth are 
known, the nature and causes of their value can be correctly 
investigated. 

It is not necessary in order to find a correct definition or 
test of wealth among civilized men to go back to an age when 
they were too savage to know the use of money and the dif- 
ferent kinds of wealth were ascertained by barter. According 
to this theoretical mode of defining wealth, it is said to consist 
of those useful and agreeable things which are exchangeable 
with each other. Barter is not now in common use anywhere 
except among savages, and it cannot furnish any units of wealth 
and value. Since Economics deals with quantity, it requires 
its units of, common measure. Practical men have measured 
wealth and value by means of the money unit ever since barter 
was disused and money adopted as a medium of exchange. 
And this method agrees Avith the mode generally adopted in 
mensuration, i. e. to take a specific quantity of the thing to be 
measured as the unit of measure; as, in length, a foot; in 
weight, a pound; in capacity, a bushel, etc. 

It is said (Mill, Book 3, Chap. 1), "The word value when 
used withoutadjunct always means in political economy, value 



AVEALTU. 17 

in exchange, or exchange value" * * * "or, the value, or ex- 
change value, of a thing means its general power of purchas- 
ing; the command its possession gives over purchaseable com- 
modities in general " 

Now — ignoring money — what is the general purchasing 
power of a bushel of wheat? In the first place there are 
many kinds and qualities, as, winter and spring; red and 
white; good and poof of all grades. Wool is said to be sold in 
London, which is its great market, in over one hundred grades. 
Coffee may be Mocha, Java, Rio, Santos, etc., of all qualities. 
Lumber or timber may be sawn or unsawn, and of rosewood, 
mahoganj", teak, oak, pine, etc. Horses and cattle may be of 
all grades and qualities; and so also of all other commodities. 
If barter were relied upon, it could be learned that wheat 
was exchangeable and therefore had exchange value, and 
little or nothing more. If a large number of horses were 
exchanged with each other, the ratio of exchange of each horse 
with each of the others would probably differ in each case, and 
therefore the amount of boot given and taken in each case 
would be different. In the absence of money, the boot would 
consist of sundry articles whose relative values would remain 
undetermined. Hence the degree of the exchange value 
of each horse, and the average exchange value of all the horses 
would remain unknown. And if they were exchanged sing- 
ly or in lots, for other commodities all variable in kind and 
quality, nothing could be known of the general purchasing 
power of any of the articles exchanged. It would be impos- 
sible to conduct business upon the basis of exchange value. 
The adoption of barter would be return to barbarism. Any- 
thing in the shape of money is more tolerable than barter. 

Where money is in use, by means of a study of the market 
reports, the ratio of exchange of a bushel of a specific kind 
wheat, as say No. 2 Spring, with specific amounts of other 
graded articles might be figured out. A table of these ratios 
might be said to exhibit the general purchasing power posses- 
sed by a bushel of No. 2 Spring wheat. And if the price of 
an average bushel of wheat were obtained from the prices 
of all the different kinds which might be quoted; and the 
same method were pursued, with rye, oats, barley, wool, cof- 
fee, lumber, live stock, cloth, tea, etc., etc.. then the general 
power of purchasing of an average bushel of wheat as com- 



WEALTH. 



pared with an average of other commodities might be ascer- 
tained. And, supposing corn in England to mean wheat, 
rye, barley, oats, pease and beans, and a bushel or a quar- 
ter of corn to mean a specific quantity of each, the price of 
an average bushel or quarter of English corn might be ob- 
tained from the market reports, and its general purchasing 
power thus arrived at. But in barter and in the absence of 
money, it would not be easy to fix for a quarter of average 
English corn, or for a specific amount of any other commodity 
"the command its possession would give over purchaseable 
commodities in general." 

The attempt to ignore money value and to reason in poli- 
tical economy upon the basis of exchange value has not tended 
toward either certainty or simplicity. It is said (Mill, Book 3, 
Chap. 1), "When we are considering the causes which raise 
or lower the value of corn, we suppose that woolens, silks, cut- 
lery, sugar, timber, etc., while varying in their power of purchas- 
ing corn, remain constant in the proportions in which they 
exchange for one another. On this assumption, any one of 
them may be taken as a representative of all the rest; since 
in whatever manner corn varies in value with respect to 
any one commodity, it varies in the same manner and degree 
with respect to every other, and the uj)ward or downward 
movement of its value estimated in some one thing, is all tliat 
needs be considered. Its money value, therefore, or price, 
will represent as well as anything else its general exchange 
value, or purchasing power; and from an obvious convenience 
will often be employed by us in that representative character; 
with this proviso, that money itself does not vary in its gen- 
eral purchasing power, but that the prices of all things other 
than that which we happen to be considering remain un- 
altered." 

Practical men in their actual dealings with wealth, and in 
"speculating" in it or about it, have found an obvious conven- 
ience in selecting money as "a representative of all the rest'* 
in all cases; especially as the relative values of other things 
are readily deducible therefrom and are not obtainable from 
any other source. Money, if composed of one of the precious 
metals, is uniform in the quality of its material, durable, 
limited in supply, and comparatively stable in its use 



WEALTH. 19 

value; whereas, woolens, silks, cutlery, sugar, timber, etc., are 
of all grades and qualities, and continually detei'iorating and 
altering in quantity, quality, and value. Even as to (English) 
corn, one crop may be of good quality, well harvested, and 
not grown musty or eaten by the weevil; another crop might 
be short in quantity and of poor quality, rusty, damaged by 
wet in the harvest, etc. There are many kinds of "woolens, 
silks, cutlery, sugar, timber, etc.," and also a great difference 
between new and old stock; whereas, the currency is all alike 
and usually is not continually becoming moth eaten, rusty ,^ 
wormy or rotten. Hence from an "obvious convenience" 
land, labor, capital, wages, interest, profits and all wealth are 
estimated and measured in money. Both national and indi 
vidual wealth are always so estimated and computed for all 
purposes. And the degree of exchange value, general ex- 
change value or purchasing power of "woolens, etc.," is only 
known by a reference to prices. 

The use value of money is affected by its abundance or 
scarcity; a great inflation of the currency depreciates its value, 
while a contraction has the contrary effect. Gold and silver 
both have a use value in the arts and for ornament as well as 
for money. Their use value as money has been greatly im- 
paired by the use made of paper money and all the various 
forms of credit. And their value has been no doubt greatly 
affected in both respects by their increase in quantity. This 
was very noticeable lately in the decline in the value of 
silver from 18Y3 to 1890; and both of the precious metals are 
said to have declined greatly in value relative to other 
things since the discovery of America. 

The supply of the precious metals is quite limited and the 
demand very uniform and their stability in value is sufficient 
for the great mass of transactions which cover only short 
periods of time. Therefore it is not material whether gold or 
silver was worth more or less in the Middle Ages or even a 
generation ago than now. If the currency and standard are 
continually tampered with, then the case is altered. Long con- 
tracts are very seriously affected by alterations made in the 
amount of money and the size of the standard. 

And from one point of view, it might be said that money 
is always changing its value. For if a man had money and 



20 WEALTH. 

no clothes, the money would have less use value to him rela- 
tive to clothes than if he had an abundance of the latter. 
And the continual variation in market prices may be regarded 
as the effect of the continually varying relation in the use 
value of commodities to buyers and sellers respectively as 
•compared with that of the money paid for them. 
■ Whether the wealth value of the money unit is invariable 
or not it is in practice assumed to be so and no better measure 
of wealth has ever been invented or discovered. 

Wealth value is not co-extensive with use value; for the 
latter may exist without giving rise to the former. As 
for instance, air has great use value, but no wealth value. 
The quantity of air is unlimited; it is not the subject of 
ownership and therefore cannot have exchange value. 
If a thing is wanted or needed and can be had for noth- 
ing it has no wealth value. And if a commodity is exces- 
sively abundant its wealth value becomes small per unit 
of quantity. A thing which is not wanted at all, has no value. 
Wealth therefore does not consist in an abundance of useful 
things, — unless they are wanted. Some people would not 
regard a great abundance of wooden shoes as wealth. And 
any amount of capacity to be useful no matter how great, has 
no wealth value and indeed no use value in the total absence 
of all want. If a race of anchorites should go naked, live 
in caves or holes and subsist upon roots and herbs, their 
wealth would be small although roots and herbs and holes in 
the ground might be abundant. If all men were like Diogenes 
there would be great utility in tubs and small utility in every 
thing else except sunshine. 

Wealth value being the same as exchange value, its quantity 
and therefore the quantity of wealth is measured by and in 
terms of the value of the money unit. An abundance of com- 
modities which are wanted and which sell for a high price 
constitute an abundance of wealth. 

Besides value, there is another element in wealth, and that 
is ownership. There must be an exclusive right to possess 
and enjoy the object of desire. Water, air and sunlight have 
utility, but ordinarily no wealth or money value. Mineral 
water, gas-light and electric light have such a value, because 
they are property and admit of exclusive ownership. If a 



WEALTH. 21 

man could get water and light by simply turning tliem on 
without any charge, their utility would be the same as if they 
had to be paid for. It is of the essence of wealth to be a 
monopoly. The seller has a supply of capacity to be useful, 
viz, a commodity, and his want is money; this belongs to the 
buyer who wants in lieu of it, the commodity. Every sale or 
exchange implies a right to make the transfer. The buyer 
would give nothing for an article which he could take with- 
out pay. The employer would not pay wages if the laborer 
was compelled to work for nothing. No one would pay in- 
terest, if capital could be had for nothing; nor would land pro- 
duce rent if everybody was free to occupy it. Wealth value is 
a monopoly value; for nothing is wealth unless it is also prop- 
erty; and the exclusive command or possession of a thing is 
of the essence of property or ownership. In fact, the word 
wealth, is often used as synonymous with possessions and prop- 
erty (Webster). An article of property may lose its capacity 
to be useful, by use and wear, or decay, or other loss of its 
intrinsic properties; or it may become old stock, out of fash- 
ion, or otherwise lose its value by a change in wants or de- 
sires. In all such cases the article would still be property, 
but it would cease to be wealth if for any cause it entirely 
lost the element of value. 

And the value of an object sinks unless it can be enjoyed in 
peace and security. Utility vanishes if a sword is suspended 
over the head of its possessor by a hair. It is related of the 
philosopher, Aristippus, that once he was at sea, and seeing a 
pirate ship at a distance he began to count his money, and then 
he let it drop, as if unintentionally, into the sea, and began to 
bewail his loss; but others say, that he said besides, that it was 
better for the money to be lost for the sake of Aristippus, 
then Aristippus for the sake of his money. Experience proves 
that a well regulated society is necessary for the existence of 
any considerable amount of wealth. 

Such would seem to be a correct exposition of the meaning 
of wealth, utility, use value, exchange and money value as 
understood and in fact acted upon by men generally in their 
dealings with one another. 

But in the science of political economy the true meaning of 
the above words or some of them has been a matter of dis- 
pute. Ricardo held that the value of a thing depends entirely 



22 WEALTH. 

upon the "quantity of labor" employed in its production. He 
says, "Value essentially differs from riches ; for value depends 
not on abundance, but on the difficulty or facility of produc- 
tion. The labor of a million of men in manufactures will 
always produce the same value, but will not always produce 
the same riches." * * * "It may be said, then, of two 
countries possessing precisely the same quantity of the neces- 
saries and comforts of life, that they are equally rich, but the 
value of their respective riches would depend on the compara- 
tive facility or difficulty with which they were produced." 

According to this idea a gold mine might be a bonanza and 
contain great riches, but, if easily worked, would be of little 
value, while a poor one found and worked with great labor, 
would contain a small amount of riches but a great amount of 
value. 

And this writer also says "Many of the errors in political 
economy have arisen from errors on this subject, from consid- 
ering an increase of riches and an increase of value as mean- 
ing the same thing, and from unfounded notions as to what 
constitutes a standard measure of value. One man considers 
money as a standard of value and a nation grows richer or 
poorer, according to him, in proportion as its commodities of 
all kinds can exchange for more or less money. Others repre- 
sent money as a very convenient medium for the purpose of 
barter, but not as a proper measure by which to estimate the 
value of other things; the real measure of value according to 
them is corn, and a country is rich or poor according as its 
commodities will exchange for more or less corn." * * * 
"That commodity alone is invariable which at all times re- 
quires the same sacrifice of toil and labor to produce it. Of 
such a commodity we have no knowledge, but we may hypo- 
thetically argue and speak about it as if we had; and may im- 
prove our knowledge of the science, by showing distinctly the 
absolute inapplicability of all the standards which have been 
hitherto adopted. But supposing either of these standards 
to be a correct standard of value, still it would not be a 
standard of riches; for riches do not depend on value. 
A man is rich or poor according to the abundance 
of necessaries and luxuries which he can command; and 
whether the exchangeable value of these for money, corn, or 



WEALTH. 23 

for labor, be high or low, they will equally contribuse to the 
enjoyment of their possessor." 

Another author of great authority (Malthus, Chap. 2, Sec. 
5) takes issue with Ricardo upon his proposition that the 
quantity of labor which a thing has cost in its production is a 
measure of real and relative value. And he also criticises 
another great authority (Chap. 2, Sec. 4) as follows: "Adam 
Smith in his chapter on the real and nominal price of com- 
modities, in which he considers labor as a universal and accur- 
ate measure of value, has introduced some confusion into his 
enquiry by not adhering strictly to the mode of applying the 
labor which he proposes for a measui'e. Sometimes he speaks 
of the value of a commodity as being determined by the 
quantity of labor which its production has cost (Ricardo's view) 
and sometimes by the quantity of labor which it will com- 
mand in exchange." (Malthus' view). 

According to these views, if a thing cost its owner no labor 
but would exchange for something which cost great labor, — 
as for instance, if a man found a diamond and exchanged it 
for a large sum of money — then according to Ricardo, the 
diamond would have no value because it cost no labor; but 
according to Malthus the diamond would have great value 
because it would command in the exchange the great amount 
of labor represented by the sum of money exchanged for it. 
On the other hand, Ricardo would consider the sum of money 
exchanged for the diamond as having great value, because it 
cost a large amount of labor to produce it, whereas, Malthus 
would say that the sum of money had no value, because the 
thing for which it was exchanged, i. e., the diamond, cost no 
labor. 

Adam Smith (Book 1, Chap. 5) says, "Labor is the real 
measure of the exchangeable value of all commodities; the 
real price of everything is the toil and trouble of acquiring it; 
also, labor never varying in its own value is alone the ultimate 
and real standard by which the value of all commodities can 
at all times be estimated and computed; also-, equal quantities 
of labor are always of equal value to the laborer." 

Hence, a pair of shoes made by a shoemaker for himself 
which pinch his feet, or a coat made by a tailor for himself 
which binds under the arms and wrinkles in the back, or a 
pair of pants which are too short and bag in the seat and in 



24 WEALTH. 

the knees, depend solely for their vahie to the laborer or maker, 
upon the quantity of labor bestowed upon them. The amount 
of utility to the maker embodied in the above shoes, coat and 
pants, in each case, is measured by the number of units of labor, 
%.. e. of toil and trouble, laid out upon them respectively. And 
the exchangeable value of a thing badly made, is or ought to 
be the same as if well made, provided, equal quantities of labor 
were expended in the two cases. And also, of two farmers, 
if one by absence of cheat, blight, rust, flies, insects, or by 
good luck, superior skill, or better quantity of land, raised 
forty bushels of w^heat per acre, and the other with the same 
amount of toil and trouble raised only twenty bushels per acre, 
then by this ultimate and real standard, the twenty bushels, 
although of an inferior quality, would be of equal value with 
the forty. Or, in mining, if one man produced twice or any 
number of times as much gold, silver, copper, iron, or coal as 
another by the same amount of labor, then the smaller quan- 
tity is of equal value with the larger. A lump of gold, or 
other valuable, casually found and picked ujd would be rated at 
one price, and the same quantity obtained after great toil and 
trouble at another. Hogs fattened upon grain would be worth 
more, although the pork was no better, than if they had run 
in the woods and fattened themselves upon acoi'ns, beech nuts, 
etc. Furs would be worth more, if the animals were raised 
by hand, then if shot Avild in the woods. Water ought to be 
worth less to a thirsty man if it burst spontaneously from the 
earth, then if distilled drop by drop out of some solution. A 
great invention or discovery would be worth nothing, if it were 
the result of a lucky accident, or of a sudden and happy stroke 
of genius, but would be of great value, if it were the result of 
the labor of a lifetime. The more labor expended upon a 
thing the greater its value. 

According to this theory, in order to measure the real and 
relative value of all commodities, a unit of toil and trouble is 
required. What are equal quantities of labor ? How much 
of the unit would be toil and how much of it trouble ? How 
do they compare with each other? The more it troubled a 
man to work, the more trouble would be undergone in a unit 
of time. This might arise from the sun shining hotter at one 
time than at another, or from sickness or ill health, physical 



WEALTH. 25 

or mental weakness, laziness or hardship peculiar to the 
occupation. 

It has been thought that labor, or toil and trouble, may be 
regarded as having two dimensions or modes of varying in re- 
gard to quantity: its duration and its intensity. Therefore, if 
a laborer began work at sunrise, the amount of toil and trouble 
undergone for the first hour of labor would be a certain quant- 
ity which might be represented by the area of a rectangle of 
which one side would represent duration, ^. e. the unit of time, 
one hour; the other side would represent the intensity of the 
toil and trouble for the first hour as above. As the sun rose 
higher and higher and shone hotter and hotter the intensity 
of the toil and trouble undergone for each succeeding hour 
would increase. This would increase the area of the rectangle 
for each succeeding hour by the continual lengthening of the 
line representing intensity. This line would also increase in 
length if the dust began to fly, and also it would increase as 
the day wore on, from weariness from the continuance of the 
toil. Hence it is evident, geometrically, that the amount of 
toil and trouble would increase continually. And hence the 
value of the labor would be much less for the first hour when 
the sun was low, the weather cool and the laborer fresh and 
unwearied, than it would be at mid-day or during the heat of 
the afternoon. The more toil and trouble, the more value 
produced 

In constructing the rectangles, a unit of length, say one foot, 
could be taken to represent the unit of time, one hour, and 
such line might be made the base of the rectangle, then its 
altitude would be the line representing intensity. How long 
shall this line be ? It has no definite relation to the one rep- 
resenting duration: Therefore, suppose it is also assumed to 
be of a certain length for the first hour of labor, as say one 
foot. Then a square foot of area represents the amount of 
toil and trouble undergone by some specified laborer for the 
first hour of labor, and therefore also represents the "ultimate 
and real standard" of value. Now for the second hour if the 
laborer exerted the same amount of energy as for the first 
hour, it would hurt him more, the same amount of toil would 
cause more trouble, as above indicated. Therefore the altitude 
of the rectangle for the second hour of labor would be greater 
than for the first hour, owing to the increase in intensity. 



26 WEALTH. 

But how much ? No one could say. Nor could physical and 
mental labor be compared, and the rectangle of each con- 
structed. And yet if labor, or toil and trouble, is the ultimate 
and real standard of real and relative value, economics fails as 
a science, unless a unit of toil and trouble can be constructed 
so as to measure the quantity of toil and trouble undergone 
by a man physically strong and mentally weak, or the con- 
trary, or strong in both respects, or weak in both; and also as 
between men, women and children; and in different occupations 
involving different degrees of hardship. 

In socialism, the unit of wealth and value, is labor for the 
period of one day of social labor time. The total annual 
production divided by the total number of social labor days 
required to produce it, gives the product due for the labor of 
one day. A certificate issued for one day's work di'aws the 
proper amount of product due therefor from the public ware- 
houses. These certificates are themoney of socialism (Shafile, 
Quintesence of Socialism). The unit of labor or toil and 
trouble, is measured only by duration, and not at all by inten- 
sity. It is arbitrarily assumed, that work for one day of social 
labor time always covers an equal anaount of toil and trouble, 
and therefore is always of equal value. Consequently all are 
paid alike, men, women and children. This unit of toil and 
trouble is an average. No allowance is made for superior 
ability, physical or mental, nor for superior knowledge, skill, 
diligence, dexteritj^, etc. Idleness, ignorance and stupidity 
are at a premium. Only the average worker gets his deserts. 
The man or boy who blows the bellows and pounds on the iron 
with the sledgehammer, draws the same pay as the skilful 
blacksmith who turns the metal into shape. One pair of shoes 
badly made by an idle, careless and unskilled workman has 
the same value in socialism as two pair well made in the same 
time by a diligent, careful and skilled workman. Stale vit- 
uals, decayed fruit, spoiled meat, mouldy shoes and moth eaten 
clothing have greater value in socialism than fresh stock 
produced and warehoused with less labor measured as above. 

But if wealth consists of utilities, its amount is measured 
by the amount of utility; and therefore, it is immaterial to the 
existence of wealth and its amount, what may be the source of 
the utility, and if derived from any source or process in which 
labor took a part, the amount of utility determines the value 



WEALTH. 27 

of the labor and not the contrary. Labor no matter how 
great, which produces no utility, is of no value. And the 
common practice is to measure the value of labor by measur- 
ing the value of its product. If the quantity of toil and trouble 
expended upon the pyramids could be measured, it would 
furnish no measure of their value. But "quantities of toil 
and trouble," if of any practical value, have not yet been 
measured or found measurable. Therefore, socialism pro- 
ceeding upon the theory that labor is the sole source of value, 
adopts an arbitrary unit. Whereas it hurts a lazy man much 
more to work than one who is naturally industrious, and also 
it hurts a child more to work than a grown person; yet social- 
ism would pay a lazy man or a child, no more than one who 
would rather work than not. And labor unions are imbued 
with a similar idea; the unpopular man is the one who can 
*' best" the average worker. 

If equal amounts of utility are produced by the same 
operative, or by different ones, during equal periods of time, 
then, and in such cases only, equal quantities of labor as 
measured by equal periods of time may be said to be of equal 
value. If any labor exerted, produced value, then it might 
be created by carrying a pile of stones back and forth, and 
enterprises which end in failure ought to' end always in 
success. Any labor whicli is so ill directed that it produces 
only a small amount of utility, is only of small value. The 
laborer who makes an excavation by carrying out the dirt in a 
basket upon his head, cannot expect the same pay as one who 
is expert with the wheelbarrow. And the farmer who is a 
bad manager will not reap the same profit as another who 
never makes a stroke amiss. 

Also, it is the consumer who measures the utility after it is 
produced. The producer cannot compel him to pay more for 
homespun, because it cost more labor, than for fine goods, 
which cost less. If the supply of an article is in excess of the 
demand, its value declines, because there is a dearth of want. 
And the laborer who would insist upon producing a com- 
modity which is no longer wanted, needs either a factory for 
the production of wants, or a law to compel others to use the 
article, whether or no. Perishable articles as fruits, flesh, 
fish, etc., if in excessive supply, are forced upon buyers only 



28 WEALTH. 

at their own price. And old stock and goods out of style, or 
not wanted, share the same fate. 

The doctrine that equal quantities of labor are always of 
equal value to the laborer might apply, if he were his own 
customer. Then he could measure the amount of his toil and 
trouble and the value of the product to suit himself. On one 
side he might figure up the pain and sacrifice caused by the 
toil and trouble, and on the other side the zest and relish 
which labor gives to appetite. But he cannot sell his product 
upon the basis of his own keen appetite, nor upon that of the 
toil and trouble which conferred it. 

II. 

DIFFERENT KINDS OF WEALTH. 

Since nothing is wealth unless it is also property, therefore, 
wealth consists of all kinds of property which have a money 
value. 

Property consists of things and rights to things; and the 
things may be corporeal or incorporeal. The word property is 
applied not only to the thing, but also to the right to it. As for 
instance, a horse may be property, and so also the right to it, 
whether absolute or qualified. The right to use the horse for 
a limited time is. property, as well as the eritire ownership. 

The word wealth has been loosely used after the samp man- 
ner. As commonly used it refers to the things which have or 
possess utility, but it has also been defined as consisting of 
utilities. 

By referring to the law of property, it is to be noticed in 
the first place, that there are certain personal rights which are 
of great value and are either essential or very material to the 
enjoyment of wealth, but which are not ordinarily classed 
under that head. These are: 

1. The right of personal security, which consists in a per- 
son's legal right to his life, limbs, body, health, reputation 
and opinions. 

2. The right of personal liberty, as defined by law. 

3. Sundry other personal rights, such as to have the benefit 
and protection of the laws, bear arms, vote, etc, 

Some of these are of inestimable value to the possessor, as 
the right to life. And the law awards as an equivalent for a 
loss or injury to any of them, damages in money against the 



WEALTH. 29 

•wrongdoer. The usual remedy at law is damages estimated 
in money. All property is valued in the law for all purposes 
in terms of the money unit; legal value is money value. 

And any person has the right to labor at any lawful callingy 
if he sees fit to do so. Time and labor expended therein is 
wealth, if it has a money value. And an action lies for work 
and labor done for another at his request, to recover its money 
value. In this country, provided a man supports himself and 
his family, he may work or not, as he chooses. If he prefers 
poverty in ease and idleness to any degree of opulence which 
might be won by industry and frugality, he is in no way 
bound to spend his life in the pursuit of wealth, or to mount 
any treadmill, socialistic or otherwise, organized for its pro 
duction. 

At the same time it is provided in the statutes that vaga- 
bonds, idle and dissolute persons who go about begging, per- 
sons who use any juggling or unlawful games or plays, run- 
aways, pilferers, common drunkards, common night-walkers^ 
lewd wanton and lascivious persons in speech or behavior, 
common railers and brawlers, per.^ons who habitually neglect 
their employment or calling and do not provide for themselves 
or for the support of their families, and all other idle and dis- 
orderly persons, including those persons who neglect all lawful 
business and habitually misspend their time by frequenting 
houses of ill fame, gaming houses or tippling shops, may be 
confined in the county jail, or in the workhouse if there be 
one, or house of correction U there be one, or fined, etc. 
Society is not at present organized in favor of any such 
persons. 

In addition to the above, there is also: 

4. The right of property, which consists in the free use, 
enjoyment and disposal of a man's lawful acquisitions without 
any control or diminution save only by the laws of the land. 

These lawful acquisitions are: 

a. Land. 

b. Personal chattels in possession, as goods, movables, 
moneys, etc. 

c. Things incorporeal, as offices, franchises, annuities, 
patents and copyrights, credits, just claims, etc. 

Not only lands and goods, but also gainful offices, valuable 
franchises, such as the right to construct and operate a rail- 



30 WEALTH. 

road or telegraph line, valuable patents and copyrights, stocks 
bonds, negotiable paper, bank accounts, just claims for money 
due and the like are all wealth in common estimation. Offices 
of trust not gainful, worthless franchises patents and copy- 
rights, bad debts and other items of property of no money 
value are not accounted as wealth. Some things so consid- 
ered may not be assignable at law, as balances due on open 
account, just claims unsettled, offices, etc., but their money 
value can be estimated by other modes than transfer. 

The rights of personal liberty, personal security and private 
property are defined in the law with great detail and pre- 
cision. Every person is required to so conduct himself and 
use his own as not to injure another. Everyone is entitled to 
pursue any lawful calling upon his own terms, and all combi- 
nations to dictate by force or threats either wages and who 
shall earn them, or the prices of products and who shall pro" 
•duce them, are alike unlawful. 

But the law sanctions and protects the monopoly which 
every man has in his lawful acquisitions. And wealth 
invested in land is equally entitled to protection with wealth 
invested in any other kind of property. And the man of 
property is equally entitled to protection as if he were poor. 
Poverty, if honestly come by, is no disgrace, but it merits no 
reward. Indeed, both human and divine law favor the dili- 
gent and frugal man, whether he be rich or poor. 

It is said (2 Kent's Com. 331) "Every person is entitled to 
be protected in the enjoyment of his property, not only from 
invasions by individuals, but from all unequal and undue 
assessments on the part of the government." It is not suffi- 
cient that no tax or imposition can be imposed upon citizens 
but by their representatives in the legislature. The citizens 
are entitled to require that the legislature itself shall cause all 
taxation to be fair and equal in proportion to the value of 
property, so that no one class of individuals and no one species 
of property may be unequally or unduly assessed. And in 
Lowell V. Boston, 111 Mass. 454, after the great fire in Boston, 
the power of the state to tax in order to lend out the moneys 
to persons who had suffered by the fire was denied. 

The exercise of the right of eminent domain is in the 
nature of a compulsory purchase, and the property taken, must 
be paid for. Usually in such cases, when the public use 



WEALTH. 31 

ceases, the property reverts to the private owner. But the 
absolute title may be taken if the statute so provides. 

For the taxes which one pays, and the other public burdens 
which he assumes in common with the rest of the community, 
he receives from the government the protection and benefit of 
its laws. Cooley's Const. Lim. 559. 

To attempt to confiscate any private property under the 
form of a tax would be evidently illegal and void. 

III. 

FALSE DEFINITIONS. 

As the money test of wealth is evidently the true one, it 
might be reasonably supposed that the science of wealth would 
accept of it as a basia, and thereupon treat of the different 
kinds and their quantity, and of the nature, causes and amount 
of their value. But this science is usually called political 
economy, and properly so, for its aims are more political than 
economic. One inference derived from it has been that dyna- 
mite is needed here as well as abroad; and its advanced 
teachers propose "to dress the commonwealth and turn it, and 
put a new nap on it." 

This science ignores the proper meaning of the word wealth 
as above given, and adopts one of its own. Thus (Mill, Book 
1, Chap. 3) "Productive labor means labor productive of 
wealth. We are recalled, therefore, to the question touched 
upon in our first chapter, what wealth is and whether only 
material products or all useful products are to be included in 
j^_" * -K- * aj shall, therefore, in this treatise, when 
speaking of wealth, understand by it only what is called ma- 
terial wealth, and by productive labor only those kinds of 
exertion which produce utilities embodied in material objects." 
According to this author, wealth alone consists of "utilities 
embodied in material objects as the product of labor." And 
this definition is taken as the basis for a treatise, assumed to 
be scientific and exhaustive, upon the "Principles of Political 
Economy with Some of Their Applications to Social Philoso- 
phy." Another treatise, less covert in setting forth its object 
and purpose, and styled "Progress and Poverty," expresses 
the above definition as follows: "Wealth is labor impressed 
upon matter in such a way as to store up, as the heat of the 
sun is stored up in coal, the power of human labor to minister 



32 WEALTH. 

to human desires." The same definition, in substance, is 
adopted in various standai'd works upon this science, by treat- 
ing the subject under the heads of the production, distribution 
and consumption of wealth; or of production and distribution. 
This method of treatment implies that wealth consists only of 
such things wliich are produced, distributed and consumed, or 
at least produced and distributed. This is the definition 
actually adopted in such treatises, although another or others 
may be mentioned, only to be afterwards disregarded and cast 
aside. 

According to the above definitions, all corporeal property 
having any utility or value which is not the product of labor 
is not wealth in respect of any such utility or utilities; also, 
all incorporeal property having utility or value, whether it be 
the product of labor or not, is not wealth. The result is that 
the following items of property are not wealth, according to 
the above false definitions, although commonly supposed to 
be so: 

1. Land in its natural state (^. e. unimproved, or, if im- 
proved, then exclusive of the improvements thereon), even if 
located adjoining to or in the heart of a great city. 

2. All natural products, as diamonds and other gems, 
lumps of gold, silver, copper or other metal, mines or deposits 
of any of them or of their ores, or of coal, petroleum, natural 
gas, slate, marble, etc.; also grass, timber, wild fruits, etc. 

3. All useful products not material; all incorporeal things 
and rights to things; all bonds, stocks, bank accounts, credits, 
offices, franchises, annuities, patents and copyrights. Any 
paper or other material evidence of any of these rights is not 
to be confounded Avith the rights themselves. The right to 
receive fifty thousand dollars a year as president of the United 
States is not wealth, as above defined. 

None of the above items are the material products of labor; 
they are not produced, distributed and consumed. An 
inventor or author may create a useful product, but it is not a 
material product, and therefore is not wealth; it is a figment 
of the brain and immaterial. The laborer who makes, as 
directed, the newly invented machine, or who embodies, as 
directed, a utility in a material object by employing the new 
process, is the productive laborer; his product is wealth, the 



WEALTH. 33 

patent right is not; and so also, the printed book is wealth, 
the copyright is not. 

Now there are not two kinds of wealth; one as above defined 
and which might be styled political economy wealth, and 
another which would include everything considered to be 
wealth in general and- legal estimation. The things above 
specified as being excluded by the definition from being polit- 
ical economy wealth, are exchangeable with the material 
products of labor and are assessed and taxed along with them; 
therefore the distinction attempted to be made between polit- 
ical economy w^ealth and other kinds is not perceptible to the 
common mind. Only those who propose to make the laborer 
the sole source of wealth, and especially the wage laborer, and 
to denounce all kinds of property excepting the material 
products of labor as spurious or false wealth, would adopt a 
definition so manifestly untrue. 

It has been already stated that it would seem to be imma- 
terial to a correct definition of wealth whether it was applied 
to the things having or possessing the utilities, or was applied 
to the utilities themselves. As commonly used the word 
wealth is understood to refer to the things, and their utilities 
are referred to under the head of value. Used in this way 
the word would include all utilities possessed by material 
objects, whether embodied by labor or not, and also all 
utilities possessed by things incorporeal, as already stated. 
As to political economy wealth, or those utilities only which 
are said to be embodied in material objects b}^ labor, it 
becomes necessary to define labor. 

The ordinary meaning of labor is (Webster) "Physical toil 
or bodily exertion, especially when fatiguing, irksome, or 
unavoidable, in distinction from sportive exercise; also intel- 
lectual exertion, mental effort." And in political economy 
{Mill, Book ], Chap. 1), "Labor is bodily or mental; or, to ex- 
press the distinction more comprehensively, either muscular 
or nervous; and it is necessary to include in the idea not 
solely the exertion itself, but all feelings of a disagreeable 
kind, all bodily inconvenience or mental annoyance connected 
with the employment of one's thoughts or muscles, or both, in 
a particular occupation." This seems similar to what is called 
by Adam Smith, toil and trouble. Another author (Cairnes, 
Chap. 4) says: "Considering labor as an element of the cost 



34 WEALTH. 

of production,' the principal remark that seems called for, is 
that in estimating it in this character, three circumstances and 
three only, must be taken account of, namely, the duration of 
the exertion, the degree of its severity or irksomeness, and the 
risk or liability to injury of any kind attending it. As com- 
modities differ greatly more in the duration of the exertion, or 
the quantity of the labor required for their production, than 
in the severity of the labor or the risk attending it, the former 
is obviously the most important circumstance in the case, and 
it was to it alone that Ricardo, in his analysis of cost, had 
regard; but manifestly his exposition was in this respect 
defective. The labor employed in producing different com- 
modities differs in severity and in liability to accident, as well 
as in mere quantity, and, in proportion as it is more severe or 
more liable to accident, implies other things being the same, 
a greater sacrifice, ajid therefore a larger cost. This greater 
sacrifice will require greater compensation, which, as in other 
cases, can only be furnished from the value of the product- 
Commodities, accordingly, willi exchange — if we confine our 
attention to the labor element of cost — not simply in propor- 
tion to the quantity of labor employed in their production, 
but in proportion to this multiplied by the severity of the 
labor or the risk attending it. When, however, we have 
taken account of the quantity, irksomeness and risk, we have 
taken account of every incident in virtue of which labor is an 
element of cost of production, and affects through this prin- 
ciple the value of commodities." 

It thus appears that labor in political economy is taken in 
its ordinary sense, as being simply human exertion, physical 
or mental, or both, and it includes nothing else. The author 
last quoted, in measuring its value would take into considera- 
tion its duration and intensity, and the risk attending it. 

And it is also to be observed that labor exerted, no matter 
how great its quantity or duration, its intensity and the risk 
attending it, goes for nothing unless a utility is embodied by 
it. For wealth as above defined consists of utilities embodied. 
Therefore no matter how great the sacrifice, if there is no 
resulting utility, the labor has earned no reward. Mere labor 
is not wealth, but the utility embodied by it, if there is any. 
In the early days of gold mining in California, a party of men 



WEALTH. 35 

carried a large ditch for many miles and found at last that 
the intended outlet was higher than the source. 

Labor signifies merely the human machine exerting it& 
energy in work. If well fed and cared for, it would exert its 
maximum power in a certain period of time. Therefore the 
same man, if savage or entirely ignorant, can exert as much 
labor in a specified time as if he were the most knowing and 
skilful of men. Different men and different races of men^ 
equally ignorant, would differ in the amount of work done by 
them, in consequence of the difference existing between them 
in physical and mental powers. 

Now labor by itself cannot create wealth, for it does not 
know what utilities to embody, nor how to do it. These 
require knowledge and skill either in the laborer, or in his 
employer or director. To know what utilities to embody and 
how to do it requires knowledge. Skill or familiar knowledge 
united to readiness of performance enables labor to embody 
the utility as directed by knowledge. Labor is one thing and 
knowledge and skill another, and the two are to be kept sepa- 
rate and separately considered, for the labor may be furnished 
by one person, and the knowledge and skill by another, or 
others. 

Labor knows nothing; it is simply force exerted by the 
human mechanism. "He (man) has no other means of act- 
ing on matter than by moving it. Motion and resistance to 
motion are the only things his muscles are constructed for. 
By muscular contraction he can exert a pressure on an out- 
ward object, which, if sufficiently powerful, will set it in mo- 
tion, or if it be already moving, will check or modify or alto- 
gether arrest its motion, and he can do no more." * * * 
"Labor, then, in the physical world, is always and solely em- 
ployed in putting objects in motion; the properties of matter, 
the laws of nature do the rest," (Mill Book ], Chap. 1). Labor 
has the same relation to utilities as other forms of energy. 
The man or the machine that can create, modify or arrest 
motion and do no more, stand upon an equal footing. Both 
require an employer and director to set them in motion in the 
right direction and for the right purpose and arrest their mo- 
tion at the right time. Labor, which of itself does not know 
what to do or how to do it, is not the source of all wealth. 



36 WEALTH. 

Knowledge directs labor to pixt the seed into the ground 
and how to produce and gather the crop; how to make the axe 
and use it; how to separate the tree into planks and convert 
them in']o a table or house; how to apply fire to fuel, cook 
food, soften or melt iron, convert into beer or sugar the malt 
or cane juice, to generate steam, and generally to take com- 
mand of the powers of nature and make them the servants of 
man. 

The steam vessel, the workshop or manufactory with all 
its tools and appliances, the railroad, bridge, house, and even 
the simplest tool, must all exist in idea before they do in fact. 
In order that a house may not be a heap of rubbish,. it must 
have a designer. He furnishes the plans and specifications 
to the smallest detail. These skilled labor, under the direc- 
tion of an employer and waited upon and assisted by common 
labor, follow, and the house becomes a fact. But although 
perfect in every part, it must be suited to its locality and to 
the purpose intended. A business house built in some se- 
■cluded spot or even on the wrong street in a city, might be 
worth less than the original value of its materials. The 
bridge, if well made and strong enough to sustain itself and 
its load, must not be too short for the span. If a tunnel is to 
pierce a mountain, it must be of the proper size and run in the 
right direction. If work were carried on at both ends and 
the two parts failed to meet each other, where would be the 
utility? Labor alone could not have built the Brooklyn 
Bridge if it had had an unlimited command of land and 
capital. Among the requisites of production are knowledge 
and skill. They lift the savage into the civilized man. They 
know how to run the machinery of production and how to 
make the machinery and the machine that makes it. They 
can endow the machine with almost supernatural intelli- 
gence and power. The telephone reproduces the voice of 
the absent; the phonograph calls up the voices of the dead. 
The locomotive finds its way in darkness as well as day- 
light and steers itself. The power loom weaves carpets, 
cloth, shawls and lace in beautiful and complicated designs. 
Knowledge includes the knowledge of wants as well as of 
the means to gratify them. It varies the product and avoids 
the production of unsaleable goods. It preconceives the 
designs and aided by skill adorns the goods with beautiful 



WEALTH. 37 

colors and figures, and gives to them a style and finish 
which commands the customer. 

It is said (Progress and Poverty), wealth is labor impressed 
upon matter in such a way as to store up the power of human 
labor to minister to human desires. Hence the labor must be 
so stored up as to answer to the desires. This requires an 
educated and directing mind, either in the laborer himself, or 
in some other person who is his employer. In the latter case, 
the employer is the author of the utility and the laborer is 
merely one of his tools. Ignorant labor cannot decide 
whether electric wires should be strung overhead or put under 
ground, nor how much current they can safely carry, nor 
whether it ought to be alternating or continuous. 

In a common text-book of political economy (Wayland- 
Chapin) it is said, "The original source of wealth is the bounty 
of God in nature, and the secondary source is human labor 
exerted to bring forth the bounty of nature in form, in time 
in place suited to the desires of men. This gives the right of 
possession,. which controls the gift of nature and the added 
utility imparted by labor." Without knowledge and skill, 
human labor can do nothing of the kind. It is only under 
their direction that the bounty is brought forth in form, time 
and place so as to be suited to the desires of men. Before 
the entire title to wealth is vested in labor it needs a precise 
definition. And when correctly defined, human labor stands 
in the same category with that of other machines, unless it is 
combined with enough knowledge and skill to run the sense- 
less machine. 

.The most important product is educated and skilled labor. 
It can be its own employer. It is sought after and paid high 
wages, and it often dictates its own price. Not so with 
ignorant labor; it mu.st advertise for work and do what it is 
directed to do. Among laborers, so called, there is no 
equality; first, are the inventors and discoverers who enlarge 
the bounds of knowledge, alleviate toil and heighten or mul- 
tiply enjoyment; next are all kinds of educated and skilled 
labor; and as labor becomes more physical and less mental, it 
sinks in the scale. The skilful carver in wood and stone 
stands below the designer, but above the carpenter or stone 
mason, and the latter above the man who mixes the mortar or 
carries the hod. A utility, being a relation between a want 



38 WEALTH. 

and a capacity to satisfy it, is not the result merely of toil 
and trouble, sweat and sacrifice; nor is its amount measured 
by them alone. In socialism, however, ignorance expects to 
bear sway and put knowledge and skill at a discount. The 
former proposes to average up and to average the latter down. 
In that state of society, the employees propose to employ their 
(employers upon a level basis of equality and fraternity. 

The father of the science of political economy says (Adam 
Smith, Book 1, Chap. 8), "The produce of labor constitutes 
the natural recompense or wages of labor. In that 
original state of things which precedes the appropriation of 
land and the accumulation of stock the whole produce of labor 
belongs to the laborer. lie has neither landlord nor master 
to share with him." 

But labor, if ignorant and unskilled, may starve upon its en- 
tire product. 

In the original state of things, the North American Indian 
was always upon the verge of starvation when he had about 
two square miles of land for himself and each member of his 
family and the sea to fish in besides. The African savage 
pays gold and ivory for glass beads; he could not make them 
if all the materials lay heaped together at his feet. The 
English take cotton from India to England, manufacture it 
into cloth at wages many times greater than the rate in India 
return the goods and undersell the native workman who 
labors for a mere handful of rice per day. The Hindoo, work- 
ing for eight cents a day and boarding himself, executed 
earthwork by carrying out the material in a basket upon his 
head. When furnished a wheelbarrow, he sought to put it 
upon his head also. Labor, of itself, does not know enough to 
trundle a wheelbarrow. And indeed it seems that the human 
mind was too stupid to invent one until its invention by 
Pascal (E. About). 

When New England was first settled, the total number of 
Indians within its limits were from thirty to fifty thousand 
divided into a number of hostile tribes. They could have 
hardly subsisted at all, without the possession of a certain 
amount of knowledge and skill. They lived in huts (wigwams) 
made of bark or mats, laid over a frame work of branches of 
trees stuck in the ground. Their habitations were removed 
from time to time when the location became too filthy even 



AVEALTH. 39 

for an Indian. Their furniture was vessels of basket work, 
baked earth, hollowed wood or stone, with mats and furs 
for hangings and for couches. Their food was fish, game, 
nuts, berries, roots, Indian corn, squash, pumpkin, a species 
of bean and one of sunflower having an i^sculent tuberous 
root. They had no salt, nor bread, and no drink except water 
and in its season the sap of the rock maple tree. They had 
tobacco. Their tools for husbandry were a hoe made of a 
clam shell, or a moose's shoulder blade fastened to a wooden 
handle. Fish were taken with lines or nets made of the 
twisted fibers of the dogbane orof the sinews of the deer. Hooks 
were made of sharpened bones of fishes and birds. The axe, 
hatchet, chisel, and gouge were of hard si one brought to an 
edge by friction upon another stone, The helve of the 
axe or hatchet was attached either by a cord drawn tight 
around a groove in the stone, or being cleft while still un- 
severed from the tree, it was left to grow until it closed fast 
around the inserted tool. Bows were strung with the sinews 
and twisted entrails of the moose and deer. Arrows and 
spears were tipped with bone, with the claws of the larger 
species of birds, or with artificially shaped triangular pieces 
of flint. Besides the stone hatchet, as a weapon of offense, 
was the tomahawk which was merely a wooden club two feet 
or more in length, terminating in a heavy knob. Boats were 
made of birch bark, or of a log, hollowed out by fire and by 
the application of rude stone tools acting upon the charred 
surface. Their clothing was undressed skins of deer or other 
wild animals for winter attire; in summer, the men wore 
about the middle only a piece of deerskin from which the 
hair had been removed by friction. Moccasins reaching 
above the ankle, of thin dressed deerskin or of the moose's 
skin, afforded protection to the feet. Their personal orna- 
ments consisted of greasy paint laid in streaks upon the skin; 
of mantles and headgear made of feathers; of earrings, nose 
rings, bracelets and necklaces of bone, shells, and shining 
stones, and pieces of copper, sometimes in plates sometimes 
strung together. (Palfrey, His. of New England.) 

Such is the inventory. The Indian had no landlord nor 
master to share with him, and paid no taxes. But they were 
liable to be killed and sometimes eaten by their enemies. 

In contrast with this, in 1880 another race of people in- 



40 WEALTH. 

habited New England and their numbers were 3,810,523. 
Their wealth pro rata woul'd compare very favorably with 
that of their predecessors. This latter population and wealth 
grew up under the rules of order and law, the appropriation 
of land, the accumulation of stock and the payment of agreed 
wages The afflicted together with the dependent paupers 
supported by public charity equaled the total number of the 
Indians as above given. And if any pauper had been dressed 
in summer with a strip of deerskin, a pair of moccasins, a 
headdress of feathers and a coat of earthy paint, and had 
been fed on corn and beans without salt, it would have been 
a case for the Humane Society. The Indian belonged to the 
stone age. He lacked civil institutions, personal rights and 
property rights limited and protected by law; and also, he 
lacked knowledge and skill. Without these, labor is naught. 
It took him over three weeks to make his boat out of a log 
of wood by the aid of lire and tools made of stone. And in 
that rocky soil a hoe made of a clam shell was of little avail. 
In 1834, Mr. Murray, a Scotchman, visited America and 
after reaching Fort Leavenworth on the Missouri, he there 
joined a band of Pawnees who were going out upon the 
plains to hunt buffalo, He describes these Indians and their 
habits at length. His account of an Indian dandy, the son of 
a chief, may be summarized as follows: When there was no 
buffalo hunt, he began his toilet by greasing and smoothing 
his whole person with fat, which he afterwards rubbed per- 
fectly dry, leaving the skin slick and glossy; he then painted 
his face vermilion, with a stripe of red also along the crown 
of his head; he then proceeded to dress his scalplock which 
was plaited into two pigtails; he then filled his ears, which 
were bored in two or three places, with rings and wampum, 
and hung several strings of beads around his neck, then some- 
times painting stripes of vermilion and yellow upon his 
breast and shoulders, and placing armlets above his elbows 
and rings upon his fingers, he proceeded to adorn the nether 
man with a pair of moccasins, some scarlet leggings fastened 
to his waist belt and bound around below the knee with 
carters of beads four inches broad. Then having thoroughly 
examined himself and his toilet being arranged to his satis- 
faction, one of the women or children led out his horse before 
the tent, etc., etc. 



WEALTH. 41 

Among the Pawnees, soap was an unknown quantity, and 
the use of water limited to drinking and cooking; therefore, 
where filth and lousiness (of two kinds) were extreme the 
utility of gi-ease applied to the skin met a corresponding want, 
while red paint served for ornamental purposes, and a pocket 
mirror stuck in the belt which held up the warrior's breech 
clout and leggings, enabled him not only to admire his own 
beauties but also to locate his parasites. 

Another definition has been given to natural wages, and 
apparently the opposite of that already given, namely, (Ricardo, 
chapter 5). "The natural price of labor is that price 
which is necessary to enable the laborers, one with another, 
to subsist and perpetuate their race without increase or 
diminution." This means labor as properly defined — not 
labor combined with knowledge and skill. It means labor 
proper, such as regards tools and machinery as its rival and 
enemy. This definition is in fact the same as the former one. 
Doubtless the North American Indian had inhabited the con- 
tinent for ages: and the limit of their numbers had been 
reached. No more than a few thousand could subsist under 
the regime of natural wages, whether- regarded as covering the 
entire product of labor or as only enough to enable the laborer 
to exist and perpetuate his species. The existence 
large amount of wealth implies the existence of a large amount 
of wants and of the means to satisfy them. These are the 
results of knowledge. The Pawnee's knowledge of wants 
was limited; he felt hunger and satisfied it by gorging himself 
with raw buffalo liver or meat; but he failed to know that he 
needed a fine toothed comb, soap, and many other things 
commonly thought useful. 

IV. 

THE SUM OF WEALTH. 

In making out a tax list, the usual method is to set down 
the property of every person and corporation with its value 
in money and the aggregate is considered as the sum of 
wealth. Such an aggregate would be the sum of the national 
wealth, unless the public lands and other public property are 
also to be included. The climate, the rivers and harbors, 
the public highways, the character of the people, the laws 
and institutions of the country and the like, are sources of 
wealth; only property having a money value is wealth. 



42 A\^EALTH. 

The quantity of the different kinds of property may be 
measured by weight, length, number, superficial area, or 
cubic contents, but their value is not measured in that way. 
Two acres of land, two yards of cloth, two cows, two pounds 
of tea, &G., may or may not be of equal value. One acre of 
land may be fertile, near market or otherwise very valuable, 
while the other might be wholly different. And so also different 
kinds and qualities of commodities may differ in value. And as 
to articles of the same kind and quality, the more abundant 
they become, the less is their utility per unit of quantity. 
If the supply of a useful object should exceed the demand, 
wealth would not continue to increase as the supply became 
more and rnore excessive. In the early days in Australia, 
mutton was worth nothing; the sheep were only valuable for 
their wool and tallow. And elsewhere cattle have been of 
no value except for their hides, horns, and tallow. In some 
parts of this country, when first settled, farm products have 
been so abundant as to bear nominal prices, and fruit left to 
rot on the ground. During the Mexican wai', the country 
between the Nueces and the Rio Grande was full of wdld 
horses, so that a horse was worth only a nominal sum. Gen. 
Grant, then a young officer lost three at one time; whereupon 
another officer remarked, when the fact was mentioned, '■ Yes, 
I heard Grant lost five or six dollars worth of horses the 
other day." 

Things are measured, as Avealth, by measuring their value. 
One thing is worth so much more or less than another; and, 
therefore, as wealth, is that much more or less than the other. 
This being true it is not correct to say (De Laveleye). "It is 
the abundance of commodities, and not their money value, 
which constitutes wealth. The greater the abundance of use- 
ful objects, the less will be their price and money value; but 
meanwhile' wealth is increased." If the abundance is such 
as to exceed the demand, or if a thing whether abundant or 
not is not w^anted at all, such abundance does not increase 
wealth. The increase would take place if the demand kept 
pace with the supply, otherwise not. It often occurs that a 
moderate crop measures more as wealth than a very abundant 
one. A superfluity loses its use value even to the consumer. 
Useful objects, so called, are not useful unless they are wanted; 
and the more they are wanted the more useful they become. 



WEALTH. 43 

The author above quoted, also says: "The number and 
nature of rational wants varies with the climate and the state 
of civilization. It may be good to satisfy more and more 
wants, in proportion as the means of producing useful com- 
modities are improved. Still it is not true, that the progress 
of civilization must be measured by the number of wants 
satisfied." "Ancient philosophy, as well as the Christian 
code, preached the moderation of wants, in accordance with 
the fine maxim of Seneca. "If you would make a man rich, 
you need not increase his wealth, but rather diminish his 
desires." This, in economic terms is the same as to say, if 
you would make a man or community rich, you need not 
increase the supply, but rather, diminish the demand. Ac- 
cording to another view, (About, Say) " the most civilized 
man is he who produces and consumes the most." This 
requires a proviso; that he consumes less than his income. 
In the slave States wealth did not accumulate as it did in the 
free States, because there was no large body of consumers. 
If the mass of the peoj^le are educated and skilled laborers, 
then wealth abounds, because high wages cause a great 
demand. The Chinese in the Pacific States have had a simi- 
lar effect upon their prosperity to that of slavery. Their in- 
dustry is great, but their frugality is excessive; and enterprise 
languished for the want of an adequate demand. 

Under the head of "false wants" and " false wealth" De 
Laveleye calls attention to the use of alcohol, opium and to- 
bacco, and from the facts, says, "The highest part of the 
human race spends annually some £400,000,000 to poison 
itself in large or small doses." Also, "According to calcula- 
tions made in the United States, in ten years, alcohol imposed 
on the country a direct expenditure of about £300,000,000, 
and an indirect expenditure of a similar sum. It has sent 
100,000 orphans to the asylums, it has brought 138,000 per- 
sons to the prison or work-house, it has led to 10,000 suicides 
and has made 200,000 widows and 1,000,000 orphans." Alco- 
hol and tobacco are largely consumed by those who make 
loud complaints about their poverty and about the unequal 
distribution of wealth. 

In addition to the idiots, insane, paupers and criminals 
made so by the use or abuse of alcohol and the narcotics, if 
it were also known how much other poverty has been caused 



44 WEALTH. 

by tliera and also by idleness, extravagance and other vices, 
some part of the tears shed by sentimental political economy 
over poverty and the unequal distribution of wealth might 
be saved. The science of wealth has been much studied; 
but the science of poverty has been neglected. There is no 
virtue in poverty, unless it was honestly come by. The feast 
to the prodigal son was a pure gratuity. 

Since everything which the law tolerates and protects as 
property — whether it be poison or not — is wealth, if it has a 
money value, the sum of wealth includes all the different kinds 
of property estimated in money. 

But it is said in political economy, (Walker) that property 
is a word with which it has nothing to do. This assertion 
implies that the right to possess and enjoy an object of desire 
is not an essential element in wealth, and also, that it con- 
sists of capacities to be useful regardless of the corresponding 
wants and desires and irrespective of the persons to whom 
the things may be useful. Following up this idea it is as- 
serted (Progress and Poverty): "By the enactment of the 
sovereign jDower, debts might be cancelled and land resumed as 
the common property of the whole people without the aggre- 
gate wealth being diminished by a pinch of snuff." And in 
illustration of this doctrine it is said (Mill), "A mortgage 
for £1,000 on a landed estate may be wealth to the mortgagee 
but it is not wealth to the country. If the engagement were 
annulled the country would be no poorer nor richer. Speaking 
nationally, the mortgage is not itself wealth, but merely gives 
A. a claim to a portion of the wealth of B. It is wealth to 
A., but in fact is a joint ownership to the extent of £1,000 in 
the land of which B. is nominally the sole proprietor; also, 
stocks held by citizens in the funds of foreign countries and 
other debts due to them from, abroad may be national wealth, 
but it forms no part of the collective wealth of the human 
race." 

It is thus asserted that debts form no part of the " sum of 
wealth" or the "collective wealth of the human race," and 
that their cancellation would not alter the sum of wealth by 
a pinch of snuff. And the statement is illustrated and sup- 
posed to be proved by the case of a mortgage from B. to A. 
for £1,000. Now a mortgage is a mere incident to and se- 
curity for a debt which is the principal thing. A mortgage 



WEALTH. 45 

for £1,000 gives no joint ownership to A. in the land of B. to 
the extent of £1,000. Any tyro in the law knows this. So 
that at the inception of this debt there was £1,0(jO in money 
in the hands of B. and in the hands of A. there was a promise 
by B. to repay the money with interest at maturity, together 
with the mortgage as a security. The only two items, there- 
fore, to consider in this typical illustration are the debt, and 
the sum of money loaned. Now the fact is that each of these 
two items are worth £1,000. The note or bill broker makes 
merchandise of such negotiable paper and it is i"eadily sale- 
able at par, and yet B. has the £1,000 in monej . The present 
value of a debt due in the future bearing the customary rate 
of interest is worth its face, if certain to be paid; if uncertain, 
it is worth so .much less down to nothing. Such is the fact,, 
and if the debt were cancelled there would be a loss as great 
as if B. cast the money into the sea or otherwise destroyed it. 

A man's credit is defined to be his reputation derived from 
the confidence of others (Webster); he is reputed to be a man 
worthy of trust and confidence. If his credit is great he need 
not give a mortgage or other security. Bankers are trusted 
with millions without security. In commerce, the freight or 
cargo is shipped and bills are drawn against the proceeds. 
The banker cashes these bills and other shipments are made. 
Without credit, the banker would not be trusted by his de- 
positors, the shipper would not trust the consignee, nor the 
banker trust either of them. Without credit, the producer 
would not be trusted with any part of the means or machinery 
of production, and capital would not pay labor in advance nor 
labor wait for its pay until the work was done ; without credit 
all the wheels of industry and commerce would stop at once. 
In this country the credit transactions done annually through 
the banks, amount to about sixty thousand millions of dollars. 
The credit transactions carried through clearing houses for 
the year ending Sept. 30, .1889, amounted to $54,494,754,- 
586.00; of which only five per cent, was paid as balances in 
money. Add to this all other credit transactions done among 
the people. 

The annulment of all debts would be the instantaneous and 
total destruction of all credit. And instead of the cancella- 
tion of all debts making no alteration in the sum of wealth, 
it would knock the bottom out of the collective wealth of the 



46 WEALTH. 

human race. The Avord panic wholly fails to express the 
idea. 

If wealth consisted only of '-'material objects," oi* utilities 
embodied in " material objects" as possessing capacities to be 
useful, then such things would be as much wealth in one 
place as in another; food contains as much nutrition and 
clothing as much warmth in the hands of the producer as in 
the hands of the consumer; coffee in Brazil or Java, tea in 
China, cotton in America, sugar in Cuba, wheat in Dakota, 
Australia &c., would measure as much as wealth, as they 
would in the hands of the consumer. And if wealth consists 
only of "material objects" then no debts are wealth, the 
above debt to A. for £1,000 secured by a mortgage was not 
wealth at all, not even to A. It was not a material product 
of labor; it is not distributed or consumed. 

Credit exerted, gives rise to credits or debts; the credit 
being the right to demand payment at maturity; and the debt, 
the duty to pay at the time agreed upon. These cannot be 
balanced off against each other and the result called zero. 
Debts due in the future are not debts due now; they bear no 
weight upon the debtor until they mature. In the meantime 
events happen; the sun shines; the seasons follow one another; 
the crop ripens; the product is produced; the train arrives; 
the ship comes home; and wealth is created or enhanced while 
the debt is running to maturity. It is said (Mill, Book 3, 
Chap, ii.) " it (credit) cannot make something out of nothing. 
How often is an extension of credit talked of as equivalent 
to capital or as if credit were actually capital." Neither 
credit nor any human agency can create matter; but by his 
own definition wealth consists of "utilities" and credit can 
create and enhance them as well as any other form of capital. 
Credit can bridge over the time between seed time and har- 
vest; the time between the raw material and the finished 
product; and the time and distance between the producer and 
the consumer. 

Debts consist of "rights" and so also as to other "utilities." 
Of what utility is food without the right to eat it, or of cloth- 
ing without the right to wear it ? 

In order to illustrate the nature of credit, instead of the 
above imaginary case of £1,000 between A. and B., take a 
real one. Dr. Franklin, when young and poor, having learned 



WEALTH. 4Y 

the printer's trade, started a printing house with oneMeredeth, 
whose father agreed to furnish the capital. But he failed to 
do so; and one hundred pounds becoming due thej' were sued 
and ruin was impending. Then two friends of Franklin 
offered to him all the money needed, but objected to Mere- 
dith. He Avas seen often drunk in the streets and playing low 
games in ale-houses. lie was bought out, and Franklin in- 
stalled as sole proprietor. The loans made to him were not 
even a lien upon the printing house; it was the sole property 
of Franklin. The debts, which could not affect Franklin 
until maturity, were worth their face, because they were paid 
in full; and yet Franklin had the printing house as his own 
propertJ^ His credit was "actually capital" to him, and it 
made him "something out of nothing." And it added to the 
sum of w^ealth; without credit the printing house w^ould have 
been closed up and the types, &c., would have figured small 
in the sum of wealth when knocked into pi under the Sheriff's 
hammer. The ricb bankers make millions out of their 
credit; and every man in business finds his credit as much 
a source of wealth to him as his monied or other capital. 

It is asserted without proof and probably regarded as an 
axiom (Mill, Book .3, Chap, ii ) that, "the same sum cannot be 
used as capital both by the owner and also by the person to 
whom it is lent; that all capital (not his own) of which any 
person has really the use, is and must be so much subtracted 
from the capital of someone else." Banks receive money on 
deposit payable on demand; they keep the -money safely, take 
all the risk of counterfeits and all the trouble of counting and 
handling the money, and often pay interest upon the deposit 
in addition. Thus the depositor has abetter use of his money 
than if it were deposited in his own till. He pays it out by 
checks upon his banker. At the same time the money has a 
great use value to the banker. He lends out a large per cent, 
of his deposits and thereby makes a great profit. The New 
York banks out of deposits amounting to about four hundred 
millions of dollars all payable on demand, lend safely as that 
much additional capital about three hundred millions of dol- 
lars and make a profit out of it at the rate of banking dis- 
count prevalent there. Credit enables "the same sum to be 
used as capital both by the owner and the person to Avhom it 
is lent." The element of time cuts a figure in a mass of 



48 WEALTH. 

money all payable at OHce. It is not all demanded at once, 
and the new deposits counterbalance the sums paid out. 

Credit is an engine of great power. In former times money 
was weighed, counted, and examined; credit has changed this. 
Money is paid out, deposited and handled in the form of 
checks and other instruments of credit. Who could other- 
wise count and pay over annually sixty thousand millions of 
dollars? Credit enables the bank of circulation to make a 
great profit by lending its own notes payable ' on demand 
without interest for the notes of others bearing interest; and 
the people have made a great profit by the use of their own 
notes (greenbacks) as money. 

Production properly consists in bringing a capacity to be 
useful (a supply) within the reacli of a want (the demand). 
And in every step of the process credit is an important ele- 
ment. It is quite essential in commerce, and commerce has 
enriched nations in all ages. The integrity of the honest and 
successful business man which makes his word as good as his 
bond and gives him credit often amounting to vast sums is a 
source of wealth to him and hence to the community. Credit 
is a potent factor in production whether it be called capital 
or not. If the word, capital, is restricted in its meaning to 
the material products of past labor, in order to furnish a basis 
for the assertion (Marx.) that capital consists of surplus 
labor value filched from the laborer, nothing is gained by it. 
Credit still continues to be an element in production, in spite of 
definitions. And credit, no matter how great, is a possession 
which was filched from nobody. 

Ill this country, it is useless to assert that credit is not a 
source of wealth, or that bonds, stocks, bills of exchange, 
notes, and bank accounts, and other credits, patents, copy- 
rights, land exclusive of the improvements thereon, mines or 
deposits of metals, minerals, coal, petroleum and natural gas, 
growing timbei', grass, wild fruits, &c., are not wealth; or 
that nothing is wealth excepting the material products of 
labor. And it does not prove the correctness of such a defini- 
tion to assert contrary to the fact, that if all debts were an- 
nulled and all credit destroyed and, indeed, all private rights 
wiped out, except as to such material products, that such a 
cataclysm would not alter the sum of wealth or the collective 
wealth of the human race^ Utilities only exist in the pre- 



WEALTH. 49 

sence of rights to }30ssess and eujoy them, in the absence of 
which the utilities vanish and disappear. 

If the existing state of society shouki be overthrown, it 
would be necessary to make out a new schedule of the items 
of wealth, based upon the subsequent and new order of 
things. And then, as now, the question whether a thing was 
wealth or not, would not depend upon a definition framed 
contrary to the truth. Nor could it be proved then, nor can 
it be proved now, that the rights of persons and of property 
as established by law are unequal, unfair and unjust by a false 
definition of wealth intentionally adopted for the purpose of 
an attack by stealth upon the settled order of things. What 
is in fact wealth now" is one thing, what ought to be wealth is 
another. 

In a state of anarchy, or barbarism the items of wealth and 
the number to share it are liable to be small. 

And in the pastoral state two pious kinsmen, Abraham and 
Lot, were compelled to separate for the sake of peace and to 
find scope enough for each. 

In any system of socialism or communism where all the 
land and capital may be owned by the State and everybody 
its tenant and hired laborer upon some fixed basis of rent and 
wages, the items properly included in the sum of wealth 
might amount to more or less than the total wealth existing 
under the present state of things. It is claimed (Progress 
and Poverty Book 9, chap. 4.) that land confiscation alone 
would bring about an enormous increase of wealth. 

V. 

THE OWNERS OF WEALTH. 

Since wealth consists of property having a money value, 
its acquisition, enjoyment, and disposal are governed by the 
law of property; which law is an expression of the general 
opinion, founded upon experience, that the method or system 
thereby adopted is the one best suited to promote the general 
welfare. 

But the science of political economy having defined wealth 
as consisting of utilities embodied in material objects by 
labor, when it comes to treat of distribution, sets up a tribunal 
of its own to try all titles to property and decide upon their 
merits. 



50 WEALTH. 

As the material objects (land, raw material) exist before 
any labor is bestowed upon them, the laborer must acquire 
his title to them from some other source than his labor. In 
short, mankind did not make the earth, therefore, what title 
have they or any of them to it, or any part of it. 

It is asserted in political economy (Mill, Book 2. chap. 2). 
" The essential principle of property being to assure to all 
persons what they have produced by their labor and accumu- 
lated by their abstinence, this principle cannot apply to the 
raw material of the earth. If the land derived its productive 
power wholly from nature and not at all from industry, or if 
there were any means of discriminating what is derived from 
each source, it not only would not be necessary, but would be 
the height of injustice to let the gift of nature be engrossed 
by individuals. The use of land in agriculture must indeed, 
for the time being, be exclusive; the same person who has 
plowed and sown must be permitted to reap; but the land 
might be occupied for one season only as among the ancient 
Germans; or, it might be periodically redivided as population 
increased; or, the State might be the landlord and the culti- 
vators tenants under it either on lease or at will." 

Since the raw material of the earth is not the product of 
human labor, a title to it must be derived from some other 
source. "Who is entitled to the. raw material of the earth? 
The producer of it, without doubt. Who made it? God, 
Then, laborer, begone . " If, however, a material object were a 
gift to the first taker or occupant as a reward for his labor in 
taking possession, then such title would be good as against 
all others having no title whatever. 

But it is asserted that the raw material of the earth is the 
gift of nature to all men alike, and that it is the height of in- 
justice to let such gift be engrossed by individuals. What 
are the evidences of such a gift? Why have not the rest of 
animated nature as good a right to live and enjoy the above 
gift as man? If to be born into the world implies a gift from 
nature of a right to life and the means to support it, why are 
so many kinds of animal life preyed upon by others? If 
every deer and rabbit that is born is entitled to life and a 
livelihood, what rights belong to the carnivorous animals? 
And if a lion, tiger, or crocodile, in order to sustain life, eats 
men or infants, is such food a gift of nature to them? Ac- 



WEALTH. 51 

cording to nature, all her gifts are the reward of superior 
force and cunning. And the man who claims the live ani- 
mal, fish, or reptile as the gift of nature to him, or as the pro- 
duct of his labor, has no better title than the man eating tiger 
to the captured Hindoo. By reason of his superior cunning 
man captures tlje fishes, who inhabit another element: not 
only for food, but also for mere sport. The gifts of nature 
do not appear to be based at all upon love, mercy, or any 
sort of sentimentalism. Well may the little bird sing in the 
tropical forest when daylight appears, and the hell be- 
neath him has no longer, for that day at least, any further 
power to destroy him. 

If man has a title to the earth as against the rest of ani- 
mated nature, because of his superior force and cunning, then 
those who are superior to the rest in these respects have the 
best title. The red man, the negro, and all other savage or 
inferior races must and ought to give way to their superiors. 
And men of the same race are endowed by nature with very 
uneqxial powers both physical and mental, hence the so called 
"gift" was not made to all of them jointly and equally. If 
nature had otherwise intended, she would have made her gift 
effectual. She may have intended that, every one should have 
the benefit of such natural or acquired powers as he, may 
possess; but there is no evidence that nature "gifted" the per- 
son who is physically or mentally weak, lazy, shiftless, im- 
provident, extravagant, &c., with a right to demand from 
others an equal support and maintenance. 

And the Scriptures fail to show that the dominion given to 
man over the earth and all its contents was made to all men 
equally or jointly. God promised to Abraham to give to his 
seed the land of the Canaanites; and after the flood an effort 
to proceed upon a communistic basis was defeated by the 
confusion of tongues. And later on it was said: Thou shalt 
not covet thy neighbor's house. For the imagination of 
man's heart is evil from his youth, and he would prefer to rob 
his neighbor of his house then to go out upon wild land and 
build one of his own. It was to furnish a pretext for such 
coveting that the above idea of a gift of nature to all men in 
common, was invented. 

If, however, the earth really belonged to all men alike, and 
a tribe or race of men could by the implied or express consent 



52 WEALTH. 

of all others, take and occupy a certain territory as their own, 
and as and for their share in the whole, then one man might 
do the same. Or, if such tribe or nation by force and fraud 
seized upon and held as their own a certain portion of the 
earth, and a division were once made among them, then the 
honesty which is supposed to reside among thieves, would 
require that such division should be ever afterwards acquisced 
in by the whole gang, including all new comers; for a society 
is a continuing body and remains the same although its mem- 
bers change continually. If a re-division were made every 
time there was a new number, no other business could be 
transacted. If that gang all died at once or were dissolved, 
then the next one could make any new or different arrange- 
ment which might be agreeable to them. 

If every person, as soon as born, owned a life interest in an 
equal share of the earth, or only in that part of it which was 
held or claimed by his people, his share in every material 
object would be very small; and if he attempted, without the 
consent of the rest, as evidenced by some fundamental rules 
adopted by them, to appropriate to his own use any material 
object, as a diamond, gem, horse, cow, sheep, or any other 
thing, under the pretext that he wanted to embody in it 
utilities as the product of his labor or any other pretext he 
would probably be treated as a thief or robber. He would 
be compelled to conform to the scheme which had been 
already adopted and live according to it, until it was changed 
by the act of the majority, or of those who had the power to 
change it. It would avail him nothing to sling dynamite or 
otherwise express his disgust. 

As to the scheme which ought to be adopted in such case, 
opinions have differed. Some have thought that everything 
should always lie open and subject to a general scramble 
where each one would have all he could obtain and retain. 
Something of this kind is seen in a new mining camp where 
every man goes fully armed and there is no other law, until 
certain rules are adopted in a miners' meeting to violate 
which afterwards is certain death. In such a rush for the 
grand bonanza, killing is a two handed game. Another 
scheme is to hold everything always in common. This is es- 
pecially favored by those who have nothing, and love idleness. 
The case of Ananias and his wife is an authority against it. 



WEALTH. 53 

Another plan would be "to nationalize the earth" or some 
certain part of it, lease it out in parcels to the highest bidder, 
and divide the net proceeds over the expenses of manage- 
ment, if there were any. This method is in practice in In- 
dia where the people are kept by it at the starvation point, 
and the tax on land has to be supplemented by a tax on salt 
and perhaps other essentials, in order to raise enough to cover 
expenses. The plan adopted in socialism would be entirely 
inadmissable. According to that scheme nobody is entitled 
to anything unless he is a productive laborer; the usufruct of 
the earth and all production is divided among them exclu- 
sively. If all men are joint owners of the earth, each one is 
entitled to his share whether he works or not. 

It is said by the social philosopher above quoted that "the 
person who has plowed and sown should be permitted to 
reap." Why so, if the field were not his own? If his labor 
necessarily absorbed as wages the entire product, then he 
might, for the field would be of no value to its owners. And 
if it took as much labor to raise the crop, as it was worth, 
whether it was large or small, then the tiller of the field 
might well be left to raise all succeeding crops. There 
would be no reason to oust him in order to let in another to 
undergo gi-eat toil and trouble, unless there was a profit in the 
land over and above all expenses And so also, as to any 
other kind of capital as well as land. What was the product 
of the man's labor, who cleared and prepared the field for 
cultivation? How could he receive anything therefor, if 
" the produce of labor [i. e., the crop) constitutes the natural 
recompense or wages of labor" in raising it? If the field had 
been originally covered with valuable timber ought the man 
who cleared the field to be held liable for destroying such 
timber or converting it to his own use? The schemes sug- 
gested, by the above quoted economist, of occupying the 
land in succession for one season only, or by the cultivators 
as tenants of the State on lease or at will have never been 
practiced except among barbarians, or by despots ruling over 
serfs. 

The father of political economy (Adam Smith) follows a 
different doctrine from the one above considered. He says 
(Book 1. chap. 8). "The produce of labor constitutes the 
natural recompense or wages of labor. In that original state 



54 WEALTH. 

of things which precedes the appropriation of land and the 
accumulation of stock, the whole produce of labor belongs to 
the laborer. He has neither landlord nor master to share 
with him." 

According to this doctrine, the earth, in the original state 
of things, belonged to nobody, neither as landlord or master, 
but belonged to the first occupant or possessor as "the gift of 
nature" to him, provided he could hold it The laborer 
measured the quantity of labor, which gave to him a title, in 
his opinion, to the produce of his labor. He claimed that he 
could cut down the finest tree in the forest, cultivate the 
most fertile spot, select the most eligible situation for his 
habitation, gather the best wild fruit, fish in the best place, 
kill or capture the best game, and generally appropriate 
everything which he could lay his hands upon. Taking 
possession, making his claim or otherwise spending toil and 
trouble about them to any extent no matter how small made 
all material objects his as his natural wages. But other 
laborers objected and raised disputes which were settled by 
the law then in force, to wit, that of the strongest and most 
cunning. In that original state of things, the right to life, 
liberty, and property all rested upon this law. Those who 
survived its operation were by way of natural selection con- 
sidered to be the fittest. 

In natural wages as above, the laborer is entitled to the 
whole produce whether the labor is great or small. Hence 
the act of taking possession and holding the material object 
was sufiicient for the purpose. A runaway sailor picked up 
in Australia a gold nugget weighing twenty three pounds 
five ounces. That was enough to make the nugget his, as the 
natural recompense or wages of his labor. He brought its 
capacity to be useful within the reach of a want, and thereby 
embodied utility in it by his labor. All natural objects hav- 
ing a capacity to be useful when brought within the dominion 
of a want, whether by great or little labor, acquire a utility 
or use value; as, trees in the forest, wild fruit, grass on the 
plains, wild cattle, ore in the mine, &c. Otherwise a man's 
breakfast has no utility until he eats it; his clothes no utility 
until he puts them on: and his drink no utility until he pulls 
out the cork. 

It thus appears to be the fact, that originally the laborer 



WEA.LTH. 55 

acquired his title to the raw material of the earth and all 
material objects, either by a first possession, or by the rob- 
bery or theft of them from their first possessors, or, failing 
these, then by purchase. The survivors of such a state of 
things, after ages of cannibalism, slavery, and all kinds of 
violence and misery, gradually adopted certain rules whereby 
material objects became lawful acquisitions, which might be 
possessed, enjoyed and disposed of in the mode prescribed. 
Things became private property and their ownership a 
monopoly in the hands of their possessors and could be trans- 
ferred from one to another by gift, grant, purchase or inheri- 
tance. As to things without an owner property can be still 
acquired in them by finding or a first possession; as, in hunt- 
ing, fishing, &c. For the sake of peace, robbery and theft are 
no longer allowed as between private persons; it is piracy on 
the water and felony on land. That form of natural wages 
is now only tolerated among nations. America was dis- 
covered by, or for, the Spaniards; who claimed the whole 
of it upon that ground and also upon a grant from the Pope. 
The fact that the Indians had previously discovered it, was 
ignored. The title of the Spaniards to the parts still undis- 
covered, derived from the Pope, was disputed by other na- 
tions, although not heretics. The English soverign acquired 
a title by discovery deemed good as against other nations, to 
a large part of North America. And the British nation has 
been discovering additional territory nearly ever since, as, 
India, Burmah, Australia, Egypt, and the islands of the sea. 
The English, French and Germans have lately discovered 
nearly the whole of Africa. 

Assuming the title of the United States to its territory to 
be good, since the Indians are nearly all dead, and the grant 
from the Pope the only outstanding title, it would seem that 
a patent for a quartei section of land to an individual, either 
as a homestead or for its jarice paid in money, ought to confer 
upon the grantee a title reasonably good, especially as against 
the grantors. 

As mankind did not make the earth nor any part of it, no 
one had any title thereto, originally, except through a prior 
possession. Law, when established, I'ecognized such title, 
and establishes and guards the bounds of private property. 
When its owners become the weaker party they will be liable 



56 WEALTH. 

to be ousted by those who are stronger. In Africa the sava- 
ges enslave and eat one another, and so it was also, in the 
matter of diet at least, among the aborigines in America. 
The Spaniards annihilated some races by subjecting them to 
a cruel slavery: and other nations were kidnappers and slave 
dealers more or less. At this time it would be considered 
amono" civilized men more humane to merely confiscate a 
man's property, by driving him o& or killing him, than by re- 
ducing him to slavery or eating him. The English in Africa 
are wholly opposed to slavery, but are determined to have the 
land and other property. 

If the earth belongs to all men alike, or to the stronger 
party only, then if one attempts to seize upon his share and 
is resisted by a previous possessor, the practice is to kill him. 
If one does a lawful act and is resisted, it becomes a case of 
self defense, which is always lawful. If this is not so, then 
it is not clear what right Europeans have in Asia, Africa, or 
indeed anywhere out of Europe. 

If a laborer acquired a useful object in any way, his posses- 
sion of it would enable him to exhaust it of all its utilities, 
natural or acquired. If he should cut down the finest fruit or 
other tree and use it for fuel, or to make his tools and wea- 
pons, or to build his habitation, he would exhaust it of all its 
utility; so also, if he gathered wild fruit and ate it. And if 
any one found or otherwise acquired gold, silver, copper, or 
other valuable and claimed it because of the labor exerted in 
picking it up and rubbing off the dirt, or other labor exerted 
in acquiring it, there would be no difference between owning 
its utilities and owning the thing itself. Therefore, no valid 
distinction can be drawn, upon the matter of title, as between 
natural utilities and those conferred upon an object by labor. 
If a man plucked an orange and squeezed it, all its natural 
and acquired utilities would come out together. Therefore 
nothing is gained in favor of the laborer, as to title, by de- 
fining wealth as consisting only of utilities conferred on ma- 
terial objects by labor; especially as the amount of labor 
whether great or small, or the kind of labor, whether physi- 
cal or mental, or both combined, cuts no figure in the validity 
of the title to the product. If one laborer sold his labor to 
another for wages, then the former would have no claim what- 
ever upon the product. 



WEALTH, 57 

The land holder makes the land his natural wages by the 
labor of occupying and holding it, and his claim is to retain 
the land until he has exhausted it of its utilities. Any laborer 
needs not only one, but a constant supply of material objects; 
as, if he were making iron, he would be continually in want 
of ore, coal, fluxes, &c. If he derived them directly from 
their places of deposit, such places would become his, as his 
natural wages, by means of the labor exerted in taking, hold- 
ing and working them. Every laborer can only acquire ma- 
terial objects by a first possession, or by robbing the possessor, 
or by purchase from him. The law says that robbery is not 
now allowable. Both labor and material objects are now 
bought and sold. 

The appropriation of land and the accumulation of stock 
gave rise to agreed wages; and civilization became possible. 
The state of anarchy came to an end. What has been the 
result? "A village carpenter employs his days labor in 
planing boards and making tables and drawers. He grum- 
bles at his lot. He dresses himself in the morning. In or- 
der to put at his disposal his simple attire, Americans must 
have produced cotton; Indians, indigo; Frenchmen, wool and 
flax; Biazilians, hides; and all the materials must have been 
transported to various towns where they have been worked 
up, spun, woven, dyed, &c. Then he breakfasts. In order 
to procure him bread, land must be cleared, enclosed, ma- 
nured, sown; the fruits of the soil must have been preserved 
with care from pillage, and security must have reigned among 
an innumerable multitude of people; the wheat must have 
been cut down, ground into Hour, kneaded and prepared; 
iron, steel, wood, stone must have been converted into instru- 
ments of labor. In the course of the day this man will have 
occasion to use sugar, oil and various materials and utensils. 
He goes out; he finds the streets paved and lighted. If he 
takes a journey, he finds that other men have removed and 
levelled the soil, filled up valleys, hewed down mountains, 
bridged rivers, diminished friction, put wheeled carriages on 
bars of iron and brought the pow'er of animals and steam 
into subjection to human wants, I venture to say that in a 
single day this man consumes more than he could produce 
himself in ten centuries" (Bastiat, Economic Harmonies). 
Under the rule of order and law, every man engaged in some 



58 WEALTH. 

lawful calling according to his inclination and abilities and 
working solely for his own interest, at the same time thereby 
best promotes the interest of all others. Under the regime 
of natural wages, the entire product was not equal to that 
now enjoyed by the civilized pauper. Under the regime of 
agreed wages, the wage laborer can buy the tool he works 
with cheaper than he could make, it, if he were given the 
materials, and fed gratis; the blacksmith can buy iron and 
steel cheaper than he could make them if all the raw materials 
were dumped down ready for him in front of his shop; the 
tailor can buy cloth cheaper than he could make it if he 
owned the sheep, &c. This system, which is the result of 
ages of practical experience, gives property and wealth, ,as a 
reward, to the wise, industrious and frugal man, and organi- 
zes society in the interest of the able and willing, and not 
of the unable and unwilling. The unable being regarded as 
objects of charity, and the unwilling as unworthy of any re- 
ward. This system has worked well. If all property were 
now confiscated for the public benefit and society established 
upon the basis of a universal poor house, whether such a 
scheme would do better is unknown, for it has not yet re- 
ceived a trial. The drift of political economy is in its favor. 
According to its leading author (Mill), the practice which has 
been always follow^ed in this country, of putting the lands 
into the hands of the people in fee simple and in severalty is 
the height of injustice; for it has not only allowed the gift 
of nature to be engrossed by individuals but has aided and 
assisted in the operation. Whereas, according to him, every- 
body ought to be tenants of the State on short leases, or mere 
tenants at will; or for a season only as among the ancient 
Germans or other barbarians, or, as among the poor and 
abject Hindoos, or the serfs of Russia. And some of his fol- 
lowers and imitators would have all grants and patents of 
land from the Government nullified by a tax made large 
enough to confiscate the land thereby granted and the same 
"resumed as the common property of the whole people." 
And all the poverty caused by idleness, extravagance, drunk- 
enness, and all the vices is charged to the present state of 
society in which private property exists as a fact. And it is 
taught, as science, that land is a peculiar and odious monop- 
oly. It is said that its area and productiveness are limited; 



WEALTH. 



59 



that after a certain point is reached its product will not in- 
crease in proportion to the labor expended upon it, for other- 
wise, infinite labor would produce an infinite crop and a few 
acres would be enough for cultivation — the remainder might 
be used for standing room: that population tends to increase 
continually and cause an increased demand for subsistence 
and thereby increase its price, and to cause an increased sup- 
ply of labor and thereby decrease its price, and therefore, 
the land owner by means of his monopoly will continually 
get more and more and the laborer less and less. The price 
of subsistence and labor, being fixed by the relation between 
the supply and the demand, if the supply of subsistence 
is limited and the demand for it liable to an indefinite increase, 
and the supply of labor is capable of an unlimited increase 
and the demand for it is limited, subsistence will go event- 
ually to famine prices and labor to nominal ones. Hence 
the land owner, especially, ought to be wiped out and the net 
product of the land equally enjoyed by all, so that when the 
world becomes over populated, the whole race might starve 
and stink out all together and at the same time. 

The above condition of things is not impending just now 
in this country. For in January 1890 in Chicago, wages 
were per hour for common labor, $0.22 ; carpenters, $0.32-^; ma- 
sons 10.45 and the wholesale prices were per bushel, wheat, 
$0.76f; corn, $0.29; oats, 10.20-^, &c; and the wages of farm la- 
borers in the country, including Nebraska, $18.00 to $20.00 
per month, with board, while farm products were on the basis 
of $0.17 per bushel for corn in Nebraska. And it is said that 
according to the Bureau of Labor statistics for North Caro- 
lina for 1888 the average price of lands in that state is $6.50 
an acre while the best farms bring less than $10, that 229 
representative farmers reported for the year 1881 an actual 
loss of three and one half per cent, on their capital. Also, 
that according to the report of the Labor Bureau of Connec- 
ticut for 1888, 693 representative farms after deducting the 
cost of hired help, feed, fertilizers, repairs, insurance, taxes 
and interest on capital, left a balance of $178,605 for the 
remuneration of the 969 males and 'i69 females belonging to 
the families of the proprietors who spent their whole time at 
work upon the farm; and taking no account of the women 
who actually do a large share of the work, the average re- 



60 WEALTH. 

ward of the 969 farmers for their work of superintendence 
and manual labor was 1184.31 for the year, Avhile the annual 
wages of the average hired man was 1386.36. At the same 
time the average wages of the operatives in ninety manufac- 
turing establishments in the State was for each operative $441 
per year, of the superintendents and overseers $1,052, and of an 
owner $4,943. In Massachusetts the average farmer received 
as his reward for labor and superintendence $326.49 and the 
average farm laborer or hired man $345. And in connection 
with the above facts the question is asked: "When the 
average farmer of New England receives less for his super- 
intendence and manual labor combined, than the average mill 
hand, and less even than his own hired man, is it strange 
that he offers to sell his farm for less than the cost of the 
buildings, and, failing that, abandons the old homestead." 

Man has been on earth at least six thousand years and a 
large part of it is still a wilderness, such as the valleys of the 
Amazon, Orinoco, La Plata, Congo, &c., and other large parts 
of the earth are very thinly peopled. So that, in fact, the 
area of land is still practically uidimited and the world large 
enough for the present and for some time to come. Also, in 
very recent times, the productiveness of land has been greatly 
increased and the powers of chemistry still remain almost 
w^holly unknown. Under the present state of knowledge, the 
earth can support many times more than its present popula- 
tion. And in the future, it may be possible to convert the for- 
ests, the seams of coal and even the nitrogen of the air 
directly into food; and even now certain things are already 
known which lubricate the human machinery, arrest waste 
and render less food necessary. 

But, of course, if population increased continually, a time 
would finally come, when the numbers would be so great, that, 
even if socialism, land confiscation, or some other scheme 
should supply enough subsistance, there will be a lack of 
standing room and a deficiency of fresh air to sustain life. 

In the savage State, the tendency of population to increase 
was not checked by the limited area of land or of its produc- 
tiveness, yet there were checks enough, of which famine was 
one. Order and law, knowledge and civilization have removed 
or mitigated many of them, such as famine, human sacrifices, 
infanticide, public and private war and the old forms of 



WEALTH. 61 

epidemics and plagues, and population has greatly increased 
in some parts of the world. But wealth and knowledge bring 
in other checks; the stock becomes sterilized and also 
influences moral and prudential are brought to bear to check 
the increase. The original American stock, once so prolific, 
is now believed to be fading out and Protestant New England 
promises to become Catholic in time. Even under the very 
moderate condition or state of wealth and knowledge existing 
in this country now, a large amount of ignorance and poverty, 
and therefore fecundity, is annually imported. The cities and 
manufacturing centers are said to be also continually recruited 
from a stalwart stock of men raised in the country, and there- 
fore, the breeding of men on the farm ought to be encouraged. 
Perhaps, the farmer might be kept poor, and therefore suffi- 
ciently prolific, by taxing his land away from him, or by some 
mode of land confiscation, the State made the universal land- 
lord and the cultivators tenants under it on lease or at will. 
Those who refuse to accept of half a mile square of fertile 
land as a gift, and prefer to crowd into the cities and towns 
and by combination and intimidation demand and insist upon 
small work and high pay will soon become too rich and in- 
tellectual to have large families. It is asserted by and for 
them that the land belongs to all men alike; hence they refuse 
to take their share out in the wilderness. If the site of a city 
belongs to all men alike, it is great impudence on the part of 
its present possessors to require others to accept of land else- 
where, even if it lay in the suburbs. Besides an offer of a 
homestead in the west, amounts to a bribe to the new comers 
to join in the present scheme of land monopoly and thereby 
finally exclude the future immigrants. 

There is said to be an unearned increment in land which 
does not justly belong to its possessor. This as to farming 
lands seems to be chiefly due to the railroads and the foreign 
consumers of farm products. The charms of a city life and 
the benefits derived from a crowded state of society seem to> 
belong to the class of unearned increments. If those who 
enjoy them would forsake the city and retire to the solitude 
of the country they would probably find that the value of 
land at a great commercial center was not due to their pres- 
ence but to the trade and business of the world. 



62 WEALTH. 

The argument brought against the land owner founded 
upon the small size of the earth and its limited productive- 
ness is quite premature and too far fetched for this country, 
where land is of small value and vast regions are offered to 
Tbe given away to actual settlers. Land here is merchandise. 
It is held by simple forms of title and stands substantially 
upon the same footing with goods and chattels. Everywhere 
land is for sale, and throughout the public domain is offered 
as a free gift. If any one desires to share in any increment 
or profit from land, let him save a part of his earnings and 
invest them in real estate, or go west and take up a home- 
stead. The man or woman, who means to win, saves some- 
thing. Dr. Franklin saved money out of his wages while at 
work in London learning the printer's trade. The Chinaman 
saves money, no matter how small his wages. There is spent 
annually in Chicago in smoke and drink more than fifteen 
millions of dollars — a large part of it by the wage laborers. 
A part of this might be saved. 

In this country, wealth is offered as the reward of industry, 
frugality, temperance and knowledge; and, barring misfortune 
is attainable by everyone to a moderate and quite sufficient 
extent by the practice of even a part of the cardinal virtues. 
And also here, any man can be his own landlord and master, 
if he chooses, and thus earn natural wages, i. e. the entire 
product, less taxes. 

Mr. Benton (Thirty Years, &c.,Vol. 1, Chap. 35) in a speech 
in the United States Senate in favor of gifts of land to actual 
settlers related the story of Granny White. At the age of 
sixty, she had been left a widow in one of the tide water 
counties of North Carolina. Her poverty was so extreme 
that when she went to the County Court to get a couple of 
little orphan grand children bound out to her, the Justice re- 
fused to let .her have them, because she could not give security 
to keep them off the parish. This compelled her to emigrate 
and she set off with her two little boys upon a journey of 
eight or nine hundred miles to what was then called, the 
Cumberland Settlement. And there this aged widow with 
her two little grand children of eight or nine years old, ad- 
vanced herself to comparative wealth by her industry and 
raised up the little children to honor and independence. 



WEALTH. 63 

If a poor old widow could do this, no man need sit down 
and whine. Instead of crowding into the city and posing as 
an object of charity, and demanding in the name of ethical 
and sentimental political economy a confiscation of land and 
capital on his behalf, if he would take to the country and es- 
pecially go west, he might in time by the practice of industry 
and frugality, become almost as much of a man as Granny 
White. 

When the Pilgrims first landed in New England they tried 
communism; hut it failed. And thereupon a certain portion 
of land was annually alloted to each house holder for the cul- 
tivation of corn. Then the community began to thrive. 
The authority of the Governor and assistants were no longer 
needed to enforce industry; and those who had previously 
professed themselves unable to work now toiled zealously for 
the benefit of their own families. Wives were no longer 
compelled to act as public servants and cook and wash for 
any members of the community the government might ap- 
point. Yet this was not enough. The industrious man saw 
the plot of ground he had laboriously cleared and manured 
pass after the expiration of the year to another, it might be 
an idle and improvident neighbor. Then application was 
made to the Governor for permanent holdings, the request 
was granted and one acre was alloted in severalty to every 
freeman. (Doyle, Puritan Colonies.) 

Communism taught even these pious and industrious peo- 
ple to feign sickness and become idle and improvident. They 
had fled from their homes in England and sought for liberty 
in Holland. They faced the wilderness and its hardships in' 
order to enjoy liberty on English soil. And when each one 
was allowed out of a broad continent to plant his foot upon 
one acre of land as his own soil and freehold, the American 
home took root in the rocky and barren soil, and the Ameri- 
can system of land ownership, liberty, and free government 
was its legitimate consequence. 

The plan above adopted finally became the general practice 
and has been continually pursued. And now vast regions still 
remain to be given away in tracts of half a mile square to 
every man who wants a homestead. And on forefathers day, 
the sons of the pilgrims by descent or adoption, get together 
and rejoice, for sundry reasons, and among others, because 



64 WEALTH. 

they consider the above mentioned one acre and other acres 
adjoining and thereto annexed, jvistly belong to them, to- 
gether with all the increment which has accummulated there- 
on during the period of two hundred and seventy years. 

The manhood that brought the pilgrim to his home here, 
enabled him in due time to stand up and say, I am the State. 
And all the coheirs of American liberty and free government 
worthy of the name subscribe to that doctrine. And the 
question is, whether a man is lit to be a ruler, who, being of 
good health and sound body, feels unable or unwilling to 
take care of himself and his family and wants to rely upon 
*' fraternity" for a subsistence. 

If any one acquires property lawfully, he thereby acquires 
an exclusive command or possession of it: ownership, there- 
fore, is a monopoly. A man's labor in a free country is his 
monopoly. In the original state of things, (savagery) he be- 
came the owner of the entire product, whether it was a wig- 
wam, field, tree, or any other material object. In this coun- 
try, if a man works for himself he owns the entire product; if 
he sells his labor for wages, then he owns his wages. His 
savings are his, whether invested in land, or any other properly. 
If a man has no property or monopoly in his savings, he has 
none in his wages. If a man has any property he can either 
use it himself, or allow another to use it for a consideration. 
If it is capital he may charge lawful interest; if land, rent; if 
labor, wages. Hence it fails to weaken the just claim to call 
either rent, or interest, the effect of monopoly, or the price of 
monopoly. Wages is the price of the monopoly which a man 
has in his labor; interest, the price of the monopoly which he 
has in his capital: and rent, the price of the monopoly which 
a man has in his land. 

Land on the plains pays no rent for pasturage because it is 
public domain and open to all, land in the Cherokee strip pays 
rent for pasturage because of the Indian title. Land which is 
too elevated, dry, or rocky, to be fit for cultivation will pro- 
duce pasturage and therefore rent; or fruit or forest trees, 
and, therefore, rent. According to the method of coppice 
growth, the wood is cut off at stated periods and a new 
growth allowed to spring up from the roots and stumps. By 
another method, the large trees are cut out leaving the 
smaller ones to grow. In 1876, fifteen acres of Scotch fir 



WEALTH. 65 

timber, eighty years old, near Perth, Scotland, sold for £132 
per acre. A handsome revenue liad been previously obtained 
from the thinnings (Hough, Elements of Forestry). Swamps 
will raise cranberries, rice, willows, &c. If a man owned the 
desert of Sahara, the rent might be small per acre or per square 
mile without irrigation. 

It is said in political economy, (Mill, Book 2 Chap. S.) 
"Private property being assumed as a fact, we have next to 
enumerate the different classes of persons to whom it gives 
rise, whose concurrence, or at least, whose permission is nec- 
essary to production, and who are, therefore, able to stipulate 
for a share of the produce." " The three requisites of pro- 
duction are labor, capital and land; understanding by capital 
the means and appliances which are the result of previous 
labor; and by land, the materials and instruments supplied 
by nature. Since each of these elements may be separately 
appropriated the industrial community may be considered as 
divided into land owners, capitalists and productive laborers. 
Each of these classes, as such, obtains a share of the produce, 
no other person or class obtains anything except by conces- 
sion from them. The remainder of the community is, in fact 
supported at their expense, giving, if any equivalent one con- 
sisting of unproductive services. These three classes, there- 
fore, are considered in political economy as making up the 
whole community." 

If private property were not a fact, the land owners and 
capitalists would be wiped out and the above three classes 
would be reduced to one. If, however, the productive laborers 
had property in their earnings, some might and probably 
would save a part of their shares of production; and thus the 
capitalists would reappear. In order to prevent this, such a 
scheme requires that nothing should be divided except con- 
sumable and perishable commodities. Also all loans made 
should bear no interest. And so it is in socialism. 

If the earth belonged to all men alike, and not to the pro- 
ductive laborers only, it would seem to follow that every one 
ought to receive something whether he worked or not, viz., a 
share of all spontaneous products or pure gifts of nature, such 
as clams, oysters, fish, game, eggs, herbs, grass, fallen timber, 
&c. But if wealth is the sole product of labor, then the 
earth furnishes no usufruct or profit in excess of the just 



66 WEALTH. 

wages of labor, and therefore no one is entitled to anything 
unless he is a productive laborer. Who then are the produc- 
tive laborers? 

One great authority (Adam Smith, Book 2, Chap. 3) 
excludes from the i-anks of productive labor all officers of the 
government, all churchmen, lawyers, physicians, nurses, 
teachers, men of letters, menial servants, musicians, players 
and buffoons. They are said to be tax eaters, tithe eaters and 
feeders off of revenue. All such persons, therefore, fall into 
the class who are supported at the expense of the productive 
laborers, "giving, if any equivalent, one consisting of unpro- 
ductive services." But the other great authority, (Mill, Book 
1, Chap. 3) has essentially modified this; for he says, "I shall 
not refuse the appellation productive to labor which yields no 
material product as its direct result, provided, that an 
increase of material products is its ultimate consequence." 
This lets dow^n the bars and admits everybody. It lets in the 
woman who cooks the victuals of a productive laborer and 
mends his clothes; those who nurse and heal him when sick, 
or make him healthy and strong, wiser and more skillful, 
more industrious and efficient, more honest and lawabiding, 
and more cheerful and happy. Even the buffoons might get 
in under this proviso. Still its author has cast a doubt over 
its application by saying that, saving souls is not productive 
labor, nor saving a man's life unless he is a productive laborer 
and produces more than he consumes. Perhaps he would 
have allowed that the act of procreation is productive labor, 
if the result as its ultimate consequence was a productive 
laborer who produced more than he consumed. All labor 
which is socially necessary muf-t be productive, when socially 
considered. 

It is laid down by the authority last quoted that labor is 
not productive unless it produces an increase of material pro- 
ducts directly or remotely. Hence if by labor and sacrifice 
a less amount of utility was produced than consumed, such 
labor is not productive, and is entitled to nothing in distri- 
bution. And for a stronger reason, all labor no matter how 
great, which ends in failure, or produces nothing of value, is 
not productive labor and therefore entitled to nothing. But 
this is measuring labor by utility, instead of the latter by the 
former. In any fair system of distribution, the things to be 



WEALTH. 67 

distributed, the persons entitled, and the respective shares of 
each ought to be accurately ascertained. Unless wealth is 
correctly defined the subject of distribution remains uncer- 
tain. And if correctly defined shall it be measured by a unit 
of toil and trouble, or a unit of utility? 

Instead of considering the subject from a socialistic point 
of view and regarding wealth as produced, collected and 
warehoused, and awaiting distribution, the matter might be 
looked at from the individual standpoint. From this point 
of view the total wealth is the sum of the wealth of the in- 
dividual members of the community, and distribution is made 
to everyone who pursues a lawful calling and obtains a 
reward therefor, whether he makes or cobbles a shoe, cures 
the jumping toothache, sets a broken bone, heals the sick, or 
saves souls. And every one who pursues his own personal in- 
terest in a lawful manner is productively employed both 
individually and socially, if he earns a reward. In this way 
wealth is naturally distributed, or tends so to be, among those 
entitled according to their several gifts and merits. Experi- 
ence has caused mankind to adopt this method of distribution 
and while it may operate to some extent unequally and the 
lame and the lazy may get left out altogether, yet this is an 
imperfect world in which the tendency is for the early bird to 
get the worm. 

Even if it were desirable to confiscate the land and capital, 
one or both, yet it cannot be done in this country now, 
because the property owners are in the majority. Until 
recently the community consisted chiefly of those who 
combined the three classes into one, They owned the land 
and capital and performed the chief part of the labor 
themselves, physical and mental. The professional wage 
laborers as a numerous and powerful class are comparatively 
newcomers. If a person owns both land and capital and 
performs all the labor himself, are any others entitled to 
share in the proceeds? If he hired another person to work 
for him, ought the latter to have more than his wages? If the 
industrial community be divided into two classes, viz., those 
who work for themselves, and those who Avork for hire, then 
the thing to prove is that the latter are entitled to the entire 
product. All labor is not manual labor; nor is all productive 
labor, hired labor. 



€8 WEALTH. 

Since the wage laborers are in a minority and therefore 
cannot at this time confiscate the land and capital directly, 
the same result is attempted to be brought about indirectly, 
by means of labor unions backed b}^ intimidation and force. 
Their point is gained if they can make the legal owners of 
the land and capital merely trustees holding for their benefit. 
The farmers still own their own farms and ciiltivate them 
chiefly by their own labor; consequently it is not easy to 
reach them. But in the other industries the wage laborers 
by unions and the capitalists by syndicates, concur in raising 
the price of their products as against the farmer. As the 
wage laborer treads upon the toes of the manufacturer he 
cries out for more tariff legisation. In order to get even, the 
Farmers' Alliance ought to adopt into their platform the 
eight hour day, and the prohibition of the importation from 
abroad of all subsistence. If this is not done, then some of 
the farmers in the piney woods of North Carolina and on the 
barren and rocky soil of New England ought to seek other 
employment, or else change places with the hired man. 

If the ofiicers of the government are merely tax eaters, 
then their numbers ought to be reduced to a minimum, and 
not allowed to multiply like maggots in an old cheese. Ac- 
cording to this idea government is an incubus and at best, merely 
a necessary evil. In taxation the most important question 
would be, whether all the taxes levied, or proposed so to be, 
were necessary: the question who should pay them would be 
a, secondary matter. Contra, however, if the people can be 
taxed rich, and the community also benefited by distributing 
the money in pensions or dividing it among the States so as to 
give their legislatures a whack at it. 

Still the army and navy might claim to be productive 
laborers, because they spent their time and risked their lives 
in keeping, off other nations who might rediscover this 
country and claim it under the pretence that the earth be- 
longed to all men alike and that its present occupants had 
possessed and enjoyed it as their own quite long enough. 
And the executive and judiciary might assert that they 
enabled the productive laborer to enjoy in peace and security 
such utilities as were lawful acquisitions on his part and that 
ownership in security was an essential element in wealth. 
And the legislators might insist that in legislation they had 



WEALTH. 69 

a panacea for all hard times, poverty, and all the ills which 
conti-nually afflict the body politic. And in proof of their 
claim they might point to the fact that they had benefited the 
manufacturer, ex-soldier, &c., by taxing the consumer, and 
could enrich the farmer by making the dollar smaller. 

If the business of production were conducted after the 
manner of running a mill, into which material objects (raw 
material) were dumj^ed by labor as into a hopper at one end 
and the "utilities embodied <fec." tumbled out at the other, 
then the productive laborers would be well fixed, provided they 
owned the means and machinery of j^roduction and knew how 
to run the mill. 

If utilities consisted merely of capacities to be useful and 
did not depend at all upon the varying and capricious wants 
of the consumers, then production might assume the form of 
routine work and any one anight soon learn enough to feed 
the mill. If people dressed in feathers, greasy paint, and 
moccasins, or even in skins, or homespun and wooden shoes, 
the machinery of production would not be very complicated. 
But the fact is, that in a civilized state of society, the case is 
entirely different. It is not every "productive laborer" who 
can build " the machinery of production" or even run it un- 
less instructed. And it is also necessary to know what utili- 
ties to embody and how to do it. All this requires knowledge 
and skill and business capacity. And since these may be 
.furnished by one man or set of men and the labor by another 
or others, they are to be separately considered. And this 
gives rise to another and important class, to-wit, the em- 
ployers; who are not to be confounded with and put into the 
class of productive laborers at present, and not at all, until 
the employees reach the point of employing their employers. 

It was said by an acute writer (Jevons) " Economics must 
be founded upon a full and accurate investigation of the con- 
ditions of utility, and to understand this element we must 
necessarily examine the wants and desires of men. We, 
first of all, need a theory of the consumption of wealth. J. 
S. Mill, indeed, has given an opinion inconsistent with this." 
*'But it is surely obvious that economics does rest upon the 
laws of human enjoyment. We labor to produce with the 
sole object of consuming, and the kind and amount of goods 
produced must be determined with regard to what we want 



70 WEALTH. 

to consume. Every manufacturer knows and feels how close- 
ly he must anticipate the tastes and wants of his customers; 
his whole success depends upon it." It is not for the pro- 
ducer to dictate the nature and style of the product to the 
consumer. A Canadian tried to induce an English manufac- 
turer to make an axe in a certain way: the only answer was 
an axe made according to the ideas of the maker with a reply 
that, that was the way to make an axe (Yeats.) The 
Mexicans say that the lack of trade with them on the part of 
the United States is owing to the failure to supply them with 
the articles they desire or require. And the late ex-Governor 
English of Connecticut is authority for the statement that 
the English and Germans monopolized the trade on the Rio 
Grande of certain cotton goods which were sold to the Mexi- 
cans by the bolt. The Americans put too many yards of cloth 
in a bolt to be able to compete; they were powerless to dic- 
tate to the Mexicans as to how many yax'ds of cloth ought to 
be put into a bolt. A certain person desiring an ornamental 
clock for his parlor mantel and being disposed to favor home 
industry applied at the store of the Seth Thomas Clock Com- 
pany. He objected to the clocks shown to him as having no 
beauty of design, whereupon the seller in a rage took down 
an ordinary clock quite suitable for a kitchen or barn and 
shoved it at the^ customer, saying here is what you want, do 
you think that you can teach people who have been fifty 
years making clocks how to make a clock? The result was 
the buyer bought elsewhere. A baker might starve people 
into buying rye bread, if he could prevent them from getting 
other kinds; otherwise, he would be compelled to comply with 
the tastes and wants of his customers, or quit the business. 

It is knowledge which preconceives the utility and points 
out the way to embody it. Mere labor or toil and trouble is 
not adequate to the purpose. The wealth of the savage is on 
vel with his knowledge. As man acquires the latter, his 
wants multiply and also the means to satisfy them. If a race 
of savages knew of the existence of iron and its uses, genera- 
tions of them might exhaust all their resources of land, labor, 
and capital in order to produce iron; but in vain, until some 
one taught them the process. Afterwards, another might 
teach them how to convert the iron into steel; but ages might 
intervene before a Bessemer would show how steel could be 



WEALTH. 71 

made by wholesale. It was said, or fabled, that the man who 
first taught the use of fire was worshipped as a demigod; but 
thereafter, a long period elapsed before the lightning was 
made to weld iron, furnish light, carry messages, draw the 
street car, &c. 

The author of Utopia, lived about three hundred and fifty 
years ago. Then England supported about two millions of 
people. The plague was always present in London and dur- 
ing every generation broke out and killed off a large part of 
the population. Sir Thomas More lived in days of compara- 
tive ignorance and squalor. The plague and sweating sick- 
ness were attributed by Erasmus to the clay floors of the 
houses which were strewed with rushes under which lay a 
purtrid mixture of beer, stinking fragments of food, and all 
sorts of nastiness. According to the state of knowledge then 
existing, it was the opinion of Sir Thomas More, as expressed 
in his Utopia, that if all the land and capital were owned in 
common and everybody worked nine hours a day, they could 
all have plenty to eat, and could have a woolen cloak to 
throw over their ordinary apparel of skins and hides, when 
they went abroad or saw company. And yet this was afflu- 
ence as compared with what labor could do, if it had not a 
master and instructor. Without knowledge, it was always 
upon the verge of starvation when the world was occupied 
by only a few people. 

In Utopia every man worked from 6 A. m, until noon, and 
after resting two hours then worked from 2 p. m. until 5 
o'clock. " Now, sir, in their apparel, mark (I pray you) how 
few workmen they need, first of all, being at work they be 
covered homely with leather or skins that will last seven 
years; when they go forth abroad they cast upon them a 
cloak which hideth the other homely apparel." Everyone 
worked under the eye of a master, and no one could go out 
of his precinct or bounds without a pass, under penalty of 
slavery for the second offense; nor could he walk abroad 
within his bounds without the consent of his father and his 
wife. "Now you see how little liberty they have to loiter; 
how they have no cloak or pretence for idleness. For there 
be neither wine taverns, nor stews, nor any occasion of vice 
or wickedness; no lurking corners; no places of wicked 
counsels or unlawful assemblies; but they be in the present 



72 WEALTH. 

sight and under the eyes of every man." And althougli their 
cities were dull, the country was duller, and therefore, they 
were drafted out of the city to work at farming in the country 
at that hard and sharp kind of life for two years, every man 
in his turn. 

Since the time of Sir Thomas More, knowledge has im- 
pi'oved agriculture; the average crop has been great' y in- 
creased and the necessary labor much reduced. Rotation of 
crops has abolished fallow, and the farmer may raise root 
crops instead of weeds; something has been learned also 
about manures and fertilizers. Agricultural chemistry, al- 
though in its infancy, teaches much; of which, however, the 
average farmer knows but little. Also farming tools have 
been greatly improved; and some knowledge of machinery 
has become necessary even to the farmer: for now — on the 
right kind of land — he that by the plough would thrive, may, 
if he likes, both ride and drive. And now instead of using a 
clam shell for a hoe, or even the sickle and the flail, he can 
run a reaper, or a header and thresher. Thomas Jefferson, 
in his day, strove in vain to induce the southern planter to 
cultivate the olive; and by a little wisdom America might in 
time become the land of the vine, and made not only a land 
flowing with milk and honey, but also oil and wine and all 
kinds of abundance. In manufacturing, knowledge and 
skill have made the labor of one man assisted by machinery 
equal to that of a hundred or hundreds laboring without it. 
And if a tariff operates as a school of knowledge, which can- 
not be taught cheaper, then pile it up mountain high, if 
necessary. In farming it may be true that any dunce can 
wear out a rich and virgin soil by raising cotton and tobacco 
at the South: and hogs, hominey, and whisky at the North. 
But to embody utilities with machinery in large quantities 
and at low prices requires knowledge and skill, at least, in 
the manufacturing industries. 

If knowledge and skill as well as physical power are be- 
hind the simplest tool its efficiency is greatly increased. And 
progress involves the handling of complicated tools, instru- 
ments and machinery; also, of subtle and powerful agents, 
such as light, heat, electricity, and chemical affinities. 
Ignorant labor is unfit to deal with electric wires, dynamos, 
steam engines, &c. Schools of industry are needed, so or- 



AVEALTU. 73 

ganized as to keep up with the progress of science arid inven- 
tion. The youth ought to be taught knowledge, skill and 
dexterity by competent masters so that their labor will be 
educated and skilled labor. The practical arts and their 
kindred sciences ought to be taught by trained and compe- 
tent men. To know some of these is not inconsistent with a 
liberal education. And instead of a limitation of appren- 
tices, every boy, no matter how poor or worthless his father 
may be, ought to have a show, and learn how to live. Then 
he would not be compelled to wander about seeking an em- 
ployer to tell him what to do. It is a wonder, how the need 
for bosses and employers of other men is supplied. They 
are often called, self made men, because they seem to produce 
themselves without assistance and at their own expense. All 
the schools of industry which could be started would be 
cheap, if in a generation they would produce a Bessemer, Sie- 
mens, or Edison. It is hardly fair to allow him to start as a 
newsboy and graduate himself out of a railroad car. 

An obituary notice in a newspaper of Sept. 13th, 1890 is as 
follows: 

Albany, N. Y., Sept. 12. — [Special.] — Robert Johnston 
died at his home in Cohoes this morning. 

[He had been connected with the cotton industry for 
seventy-six years. He was born in Dalston, England, near 
the Scottish border, Feb. 2, 1807, commencing work as a bob- 
bin boy in Dixon's cotton mill, Warwick Bridge, Northum- 
berland, England, when he was only seven years of age. 
The wages paid to bobbin boys at that time was sixpence a 
week. In 1830 Mr. Johnston came to America and hired 'Out 
as a spinner in a mill in Providence, R. I. He did all the 
spinning for the mill on a pair of hand mules. In 1834 Mr. 
Johnston went to Valaties, N. Y., and took charge of a cot- 
ton-mill. While there he produced the first muslin delaine 
ever made in this country. The warp was spun in Valaties 
and the filling was imported from England. In 1850 he ac- 
cepted the management of the Harmony Mill, and from that 
date the cotton industry in Cohoes has been a success. Since 
Mr. Johnston's management, which continued up to the time 
of his death, the concern has grown and developed until it is 
now one of the largest cotton plants in the world. The com- 
pany operates between 6,000 and 7,000 looms, and makes 



74 WEALTH. 

over 80,000,000 yards of cloth per annum. Four thousand 
hands are employed.] 

The carpenters of Chicago struck for forty cents an hour, 
an eight hour daj^, the limitation of apprentices, the recogni- 
tion of their union and the discharge of all non union men- 
This strike implied that among so many thousand men com- 
bined together in a union for their common benefit, there was 
not the necessary knowledge and skill to enable them to bid 
upon jobs and execute them, themselves. If they had had 
the capacity to execute the work alone, they could have dis- 
missed their employers and obtained the whole profit. But 
union and co-operation fail in the absence of the requisite 
ability. By their strike, these carpenters admitted that their 
proper position was to be hired men, and that they were in- 
competent to be their own employers. 

Education may be no cure for stupidity, but it is for igno- 
rance. And any man ought to blush who would combine with 
others to promote ignorance. Instead of a limitation of 
apprentices, every boy ought to have a chance to become the 
employer of such men. He ought to be taught how to em- 
body utilities of some kind or other. There ought to be no 
premium put upon ignorance, at least in this country. The 
employers replied to the striking carpenters, among other 
things, that there was a great difference in the abilities of 
men working at carpentry and therefore a uniform rate of 
wages was out of the question. In the time of the handi- 
crafts, the guilds required every man to serve an apprentice- 
ship and otherwise qualify himself as a master of his trade 
before he could practice it. Then, it was not enough to make 
a man a carpenter or a mason for him to join a union and 
swing a broad axe or whack a brick or stone with a trowel 
and call himself a mechanic. Such men demand that no skill- 
ful man shall "best" anybody, and that all shall be paid 
alike. 

As to mere labor its value cannot Ije measured by any unit 
of time or of toil and trouble. If a small amount of utility 
is embodied by it, its reward must be small, although the toil 
and trouble, time and sacrifice may be great. If labor dupli- 
cated the tower of Babel it would not be entitled to pay in 
proportion to the sacrifice. Labor ought not to claim more 
than its entire product. And in the original state of things it 



WEALTH. 15 

was very liable to starve upon such wages. But when labor 
fell under the direction of knowledge and skill a change took 
place which converted savagery into civilization and poverty 
and starvation into wealth and abundance. Knowledge has 
stripped off from the common laborer the skins of animals and 
clothed him in decency and comfort. Knowledge and skill 
enables a diamond cutter in Amsterdam to earn live dollars a 
day, when a common laborer only obtains twenty-five cents. 
And the man who can point out what utilities to embody and 
how to do it gets large pay, although he may sit in the shade, 
and see that common labor performs its alloted task. 

Although mere labor could not support and perpetuate itself 
after population had at all multiplied, yet on economic 
grounds, the share allowed to it in distribution ought to be 
enough to keep the human machine up to its maximum effi- 
ciency and pay for its reproduction. If it gets any more, it 
is because of competition among employers, or of a corner in 
the labor market brought about by strikes. 

And there is, no doubt, a period of daily toil, varying with 
the occupation, during which the human mechanism would 
on the average exert its maximum of energy. If this were 
ascertained to be eight hours per day, then, an employer 
ought to pay more for an eight hour day than for one of ten. 
And also, it would be against public policy to permit the 
wage laborer to injure himself hj over work, since it produces 
nervous and physical exhaustion, which causes him to seek 
relief in smoke and drink and other vices. Although a cer- 
tain amount of exercise is just as necessary to keep the mind 
and body in a healthy state as food, clothing and shelter, no 
deduction from the proper wages of labor could be made on 
that account, because the amount allowed as above is all re- 
quired to keep the laborer up to the mark. 

In any system of production suited to the wants of civilized 
men, whatever may be a fair rate of wages for labor, con- 
sidered by itself and as duly separated from the possession of 
knowledge and skill, it is quite evident that mere labor is not 
the sole author of the product and the wage laborer not entitled 
to it all. The men who need employers to tell them what to 
do are not the sole authors of all Wealth. 



AMERICAN MONEY. 17 



AMERICAN MONEY. 



THE STANDARD. 



Wealth is measured by money and in terms of the money 
unit. If such unit be called a dollar, whatever represents it 
in circulation, as for instance a certain quantity by weight of 
gold or silver, is the standard unit of common measure of 
wealth, and its value the unit of wealth value. If a horse 
were worth one hundred such dollars; then the horse, as wealth, 
is one hundred times more than one dollar; or, its value is one 
hundred times greater than the value of one dollar. If a debt 
calls for the payment of one hundred dollars its value is rated 
in terms of the value of one dollar. And if before payment 
the value of the dollar is altered artificially by either debasing 
or enhancing it, a wrong is done to one of the parties. Any 
unit of common measure may expand or contract, or otherwise 
alter from natural causes; but any artificial alteration has al- 
ways been considered by the party or parties injured to be an 
injustice. 

Such being the case, the first thing to consider is the stan- 
dard or money unit of common measure. 

By the Federal Constitution, power was conferred upon 
Congress: To coin money, regulate the value thereof, and of 
foreign coin, and fix the standard of M'eights and measures. 

The first coinage act (April 2, 1792) provided that the 
money of account of the United States should be expressed in 
dollars or units, decimally divided into, dimes or tenths, cents 
or hundredths, and mills or thousandths; and that all accounts 
in the public offices and all proceedings in the courts should 
be kept and had in conformity thereto. And this regulation 
has remained unaltered ever since. The next step was to 
specify what should represent the dollar or unit and its multi- 
ples and submultiples The coinage was based upon Troy 
weight, which is still in use; and a double standard was 
adopted. Theory requires that a unit of common measure 



18 AMEEICAN MONEY. 

should be single. And if a double standard signifies two 
standards of different sizes, it is wrong in theory. If a gold 
dollar and a silver dollar were always of the same value, then 
the unit of value is single, otherwise not. In July, 1864, the 
gold dollar was worth $2.85 in greenbacks, therefore a horse 
at that time worth one hundred dollars in gold was worth two 
hundred and eighty five dollars in greenbacks. The paper 
dollar and the gold one did not agree as a unit of value. 

By the first coinage act the silver dollar was required to 
contain 3'71.25 grains of pure silver with enough alloy to make 
its standard weight 416 grains. In estimating coins the alloy 
is not valued. Collector v. Richards, 23 Wall, 246; probably 
because the precious or pure metal would be worth as much 
without the alloy. The smaller silver coins were in proportion 
to the dollar. A gold eagle (1 10) half and quarter eagle were 
also authorized. The standard weight of the eagle was fixed 
at 270 grains, of which 247.50 grains were to be of pure 
gold; the other gold coins to be in proportion. This act, 
therefore assumed that 371.25 grains of pure silver and 24.75 
grains of pure gold were of the same value and would always 
remain so; otherwise, two different units of value were 
adopted instead of one. At that time the mother country had 
a double standard, and it was no doubt considered the correct 
thing to have. The above statute assumed the relative value 
or ratio of silver to gold, for equal weights of each, to be 15 
to one— since 371.25 = 15x24.75. Such was the case in 1793, 
but never at any time afterwards. After that date gold ap- 
preciated until in 1813 the ratio was 16.25 to 1; after which 
there was a decline until the ratio in 1859 was 15.19 to 1; 
after which time the relative value of silver depreciated until 
in 1888 the ratio was 2 1.99 to 1. The appreciation in the value 
of gold made the gold coins worth more than their nominal 
value in silver dollars, and they ceased to circulate. In regu- 
lating the value of money, a law may assign a value to a coin 
less than that of the metal contained in it and declare it to be 
a legal tender at that rate, but such a law is nugatory; all such 
money is exported or hoarded. During the late civil war, 
when a paper dollar was the standard, all the coins disappeared 
from circulation and all current money even to five cents was 
in paper. 



AMERICAN MONEY. 79 

By the act of June 28, 1834, the gold coins were debased 
both in weight and fineness; the standard weight of the eagle 
was reduced to 258 grains, of which 232 grains were to be 
pure gold, the other gold coins to be in proportion. This 
adopted a ratio of 16+to 1, the actual ratio between the two 
metals in 1884 was 15.73 to 1. Hence the gold coins were 
debased too much, and the silver coins became more valuable 
pro rata than the gold ones. 

Afterwards by the act of January 18, 1837, a uniform stan- 
dard of nine-tenths fine was adopted for both gold and silver 
bullion. This reduced the standard weight of the silver dollar to 
412.50 grains — one-tenth deducted from this for alloy left 
371.25 grains of pure silver as before. The standard weight 
of the gold coins was not altered, but a little more gold was 
added — one-tenth of 258 grains deducted for alloy left 232.2 
grains of pure gold. This act assumed the relative value of 

371.25 
silver to gold to be — — ^ = 15.988+to 1; and this has been 

the legal ratio ever since. The actual or market ratio then 
was 15.83 to one, and the value of silver remained above the 
legal rate until 18 74. This caused the silver coins to disap- 
pear. And in order to retain the fractional silver coins in cir- 
culation their weight was debased in 1853; the standard 
weight of the half dollar was reduced to 192 grains; the others 
in proportion. The silver dollar disappeared and became un- 
known in circulation until 1878, prior to which date the total 
number coined was 18,031,238. 

If lhe ratio as to value between silver and gold had always 
remained the same, as for instance at the rate of J 5 to 1, as 
adopted by the first coinage act, then the two standards would 
have been continually the equivalents of each other and thus 
tantamount to a single standard. But the market ratio would 
vary and all attempts to make the two standards agree, proved 
to be futile. Similar experience elsewhere led to the adoption 
of a single standard by England, Germany and other nations. 
Each of the precious metals has a use value of its own in the 
industrial arts, for ornament, &c; and the supply of each is 
independent of that of the other; so that when both were free- 
ly used in coinage the varying relation between the supply 
and demand as to each metal caused its value to vary from 
time to time. Hence the relative value of the two metals 



80 AMERICAN MONEY. 

would not remain invariable under a very general free coinage 
of both. In the report of the director of the mint for 1889 is 
given a table exhibiting the ratio of silver to gold from 1687 
to 1888 both inclusive. In 1687 ihe ratio was 14.94 to 1; in 
1859 it was 15.19 to 1; between these dates the ratio fluctuated 
back and forth, being lowest in 1760, 14.14 to 1, and highest 
in 1813, 16.25 to 1. After 1859 the gold price of silver de- 
clined and rapidly after 1871, until the ratio in 1888 M^as21.99 
to 1. This was due to a great decrease in the demand for it 
for coinage and a great increase in the supply. The annual 
silver product of the United States increased from 31,550,000 
fine ounces in 1879 to 60,000,000 fine ounces in 1889; and the 
world's product increased nearly twenty per cent, from 1885 
to and including 1888. la spite of the great increase in trade 
and business it is likely that the use value of the precious 
metals for money has been much impaired by the greatly in- 
creased facilities for doing business resulting from the effects 
of steam and electricity, the use of paper money and of all the 
various forms of credit. And it is not demonstrable that the 
adoption of a single gold standard by Germany and other na- 
tions enhanced the value of money relative to land, labor and 
other things. It also remains to be seen whether all the gold 
and silver, less the quantity used in the industrial arts, is act- 
ually needed for use as money. If all credit currencies were 
abolished there would be a greater demand for coin. 

The next alteration in the money unit was the adoption of 
a paper (greenback) dollar as the standard of value. In 1861 
the Southern States attempted to secede from the Union and 
civil war ensued; and in December 1861 specie paymentswere 
suspended and not resumed until January 1, 1879. The war 
was of colossal magnitude and from necessity it was prose- 
cuted upon credit. A national currency was required. The 
effort to furnish through the mints a hard money currency 
had failed; the paper money issued by state banks continually 
drove out the specie. The United States notes (greenbacks) 
were first authorized by the act of P^ebruary 25, 1862. They 
were made lawful money and a legal tender for all debts pub- 
lic and private, except duties on imports and interest upon the 
public debt. Except for these. purposes the greenback dollar 
furnished the unit of value from its first issue in 1862 until 
January 1, 1879. The gold dollar was worth in paper, in 1862 



AMERICAN MONEY, 81 

from 11. 0]^ to $1.34; in 1864 from $2.85 toll. 51^; in 1878 
from $1.02|- to $1.00. Wlien the gold dollar was worth $2.85 
in paper, the paper dollar was worth $0.35-j- in gold. When 
brought to face the necessity, Congress found authority for 
this paper money among its implied powers. Under the power 
to borrow money, bills of credit in a form fit for circulation 
as money could be issued, and this power, and other express 
powers justified making the bills lawful money and a legal 
tender in payment of debts. It became manifest during 
the civil war and afterwards, and it was also quite evident be- 
fore, that Congress could not regulate the value of money 
unless it took exclusive control of the currency. 

After the issue of greenbacks, there were three kind« of legal 
tender, United States notes, gold coin and silver dollars. But 
the silver dollars had disappeared long before; in 1859 a silver 
dollar was worth $1.05 in gold. In like manner the paper 
dollar supplanted the gold one. At this time there are four 
kinds of legal tender, namely, gold coin, silver dollars, green- 
backs and treasury notes issued for the purchase of silver un- 
der the act of July 14, 1890. And, at this time, none of these 
kinds are soft enough to suit the debtor. 

It is lawful, if practicable, to buy or borrow in terms of a high 
priced dollar and sell or pay back by a cheap one. Thus it 
was held that a debt incurred previous to the issue of green- 
backs could be paid afterwards in paper; Legal Tender cases, 
12 Wall. 457. And it was said by the Court in Juilliard v. 
Greeman 110 U. S. Rep. 421, that Congress may, as it had 
done, debase the standard coin and thereby enable debtors to 
discharge their debts by payment in the baser coins. And 
also, that a contract to pay a certain sum in monej^, without 
any stipulation as to the kind of money in which it shall be 
paid, may always be satisfied by payment of that sum in any 
currency which is lawful money at the place and time at 
which payment is to be made, citing. Hale, P. C. 192,194: 
Bac. Abr. Tender, B. 2: Pothier. Contract of Sale, No. 416: 
Pardessus, Droit Commercial, Nos. 204, 205. Seawright v. 
Calbraith 4 Dall. 324. And it was also said, that the obliga- 
tion of parties is always assumed with reference to the power 
of the government over the currency. Although it has been 
adjudged that a creditor may stipulate for payment in a specific 
kind of dollars (Bronson v. Rodes. 7 Wall. 229) yet it is not 



82 AMEEICAN MONET. 

clearly settled that this privilege may not be taken away or 
nullified. Congress has the power to alter the money standard, 
debase tlie coin and make bills of credit a legal tender; but an 
alteration of the standard unit of common measure is only justi- 
fiable for sufficient reasons: as for instance, to save the Union 
in a great civil war, or avert some other great catastrophe. 
Since Congress has this power, it is the sole judge of the 
necessity for its exercise, as, if it should desire to raise the 
price of silver by buying large amounts and emitting bills of 
credit therefore, or otherwise to soften the money by other 
issues of paper. 

In the absence of any such an overruling necessity, some 
think that the money standard ought to be single and as per- 
manent and invariable as possible, and that a double standard 
is objectionable because the two units of common measure 
may not always agree. At this time there is a compound 
double standard, to-wit, two of coin and two of paper. Now 
it was said formerly, Deut. 25.13: Thou shalt not have in thy 
bag divers weights a great and a small: Thou shalt not have 
in thine house divers measures a great and a small. In those 
days money passed by weight — as standard coins ought to do 
now. Excepting as to money it is still considered to be dis- 
honest to alter the unit of common measure, as to past tran- 
sactions still current; or, to have divers weights in the bag, or 
divers measures in the house. 

In the revision of the coinage law (Feb. 12, 18*73) the coin- 
age of the silver dollar was discontinued; it was then still 
worth more than a dollar in gold. 

The act of Feb. 12, 1873, provided that the standard for 
both gold and silver coins of the United States should be, 
such, that of one thousand parts by weight nine hundred 
shall be of pure metal and one hundred of alloy: the alloy of 
the silver coins to be of copper, of the gold coins, copper or 
copper and silver, but the silver in no case to exceed one- 
tenth of the alloy. 

Also, that the gold coins of the United States should be a 
one dollar piece which at the standard weight of 25.8 grains 
should be the unit of value; the other gold coins to be a three 
dollar piece, a ten dollar piece or eagle, and a double, half and 
quarter eagle, of standard weights in proportion to that of the 
gold dollar. 



AMERICAN MONEY. S3 

The theory of this law is, that a dollar in gold coin, is a 
piece of gold certified to be of a certain weight and purity by 
the form and impress given to it at the mints of the United 
States. Any number of such dollars is the number of grains 
of standard gold in one dollar multiplied by the given num- 
ber, Bronson v. Rodes 7 Wall. 229. Ever since the resumption 
of specie payments, January 1, 1879, all wealth and wealth 
value have been estimated, measured and computed throughout 
the United States in terms of the gold dollar and its value. 
By a recent act, the coinage of the gold dollar and three dollar 
piece is to cease, and these coins as fast as paid into the 
Treasury are to be withdrawn and made into the other denom- 
inations of gold coin. This act, however, will make no 
change in the unit of wealth and value. Until a change of 
standard actually takes place, the unit of wealth and value 
will be 23.22 grains of pure gold, as it now is. The gold dol- 
lar is too small a coin for ordinary use: and the three dollar 
piece is not needed. 

Coinage is a certificate of the weight and purity of the 
metal contained in the piece: i't is a labor saving device. With 
a proper series of pieces all payments can be made by a mere 
count of coins. Standard coins, therefore, now pass by weight 
just as the precious metal did before coinage was invented. 
Token money stands upon a different footing as hereinafter 
explained. When the precious metal was used in bulk as 
money, it was not easy to ascertain its weight and fineness. 
Coinage is intended to meet these objections, and the law re- 
quires great exactness in the execution of the coinage and in 
order to secure it, enters into great detail. 

Even by the exercise of the highest knowledge and skill 
and of the use of the best known appliances, the standards 
for v^'eight and fineness cannot be exactly complied with; 
therefore, a certain deviation or tolerance is allowed; but 
which, it is illegal to exceed And the law declares that the 
gold coins of the United States shall be a legal tender in all 
payments at their nominal value, when not below the stan- 
dard weight and limit of tolerance provided by law for the 
single piece, and, w^hen reduced in weight below such stan- 
dard and tolerance shall be a legal tender at a valuation in 
proportion to their actual weight. 



84 AMERICAN MONEY. 

The deviations allowed by law as to the various coins are: 

In fineness: No ingots shall be used for coinage differing 
from the standard more than: in gold ingots, one part in a 
thousand, or 0.001: in silver ingots, 0.003: in minor alloys, 
0.025 in the proportion of nickel. 

In weight: The following deviations shall not be exceeded 
in any single piece: double eagle and eagle ^ a grain: each of 
the other gold coins :^ of a grain: each silver coin 1^ grains: 
each five cent piece 3 grains: each 3 cent and one-cent 2 
grains. And in weighing a number of pieces together, when 
delivered by the coiner,the deviations from the standard shall 
not exceed in every $5,000 in double eagles, eagles, half and 
quarter eagles, and in every one thousand three dollar and 
dollar pieces y^^ of an ounce: in one thousand silver dollars, 
halves and quarters ^-f^ of an ounce: and in one thousand 
dimes j^q of an ounce. If any coins executed are found to 
"deviate from standard more than the legal limits, they are 
required to be defaced and recoined. The coinage is in fact 
effected at an actual deviation of about one-half of the legal 
tolerance. 

Coins lose in weight by use and wear; this being caused by 
the public is a proper public charge. And the law provides 
that: Any gold coins of the United States, if reduced in 
weight by natural abrasion not more than one-half of one per 
centum below the standard weight provided by law after a 
circulation of twenty years as shown by the date of coinage, 
and at a rateable proportion for any less period, shall be re- 
ceived at their nominal value by the United States Treasury 
and its offices, under such regulations as the Secretary of the 
Treasury may prescribe for the protection of the Government 
against fraudulent abrasion and other practices: also, any 
gold coins in the Treasury when reduced in weight by 
natural abrasion more than one-half of one per centum below 
the standard weight prescribed by law shall be recoined. 

Provision is made from time to time for the recoinage of 
light and worn silver coins. 

The law also provides that: Xo foreign gold or silver coins 
shall be a legal tender in payment of debts; also, that all 
foreign gold and silver coins received in payment for moneys 
due to the United States shall, before being issued in circula- 
tion, be coined anew. 



AMERICAN MONET. 85 

Almost every nation bas a standard and money system of 
its own, and foreign money is not available to tbem for circu- 
lation; tberefore, foreign money is generally wortb no more 
tban its bullion value. Excepting, however, that Mexican and 
Spanish dollars are current in China and the far East, and 
Austrian (Maria Theresa) thalers in the Levant. For export 
the newest and heaviest coins are the most profitable; but in 
paying a draft from abroad the light coins, if still within the 
standard and tolerance, are quite sufficient for the purpose. 
Fine bars are the most suitable for exportation, because coins 
even when newly made are not exact and the variation be- 
comes very perceptible where large amounts are involved. No 
one could measure a mile accurately with a foot rule. The coin- 
age mints and the assay office at New York make both gold 
and silver bars, none of less weight than five ounces. They are 
required by law to be stamped designating their weight and 
fineness and with such devices impressed thereon as may be 
deemed expedient to prevent fraudulent imitation. Gold 
bullion may be deposited to be made into coin or bars: silver 
bullion to be formed into bars only. Any deposit of less 
value than SlOO may be refused; also, bullion so base as to be 
unsuitable for the operations of the Mint. The charges are 
enough to cover the cost only. No charge is made for con- 
verting standard gold bullion into coin: nor upon other gold 
bullion except to prepare it for coinage. 

On deposits of gold coin. United States mint or assay office 
bars, or fine gold bars bearing the stamp of well known refin- 
eries payment therefor may be made at once within two per 
cent, of the value contained therein, provided no partial pay- 
ment shall be made on a deposit of less value than $5,000. 

Gold bars are also exchanged at the coinage mints and the 
New York assay office for gold coin of legal weight offered 
in sums of not less than $5,000. 

During the fiscal year -ending June 30, 1888, the amount of 
gold bars made was nearly fifty-two millions of dollars and of 
silver bars about seven and one-half millions of dollars at 
coining value. During the fiscal year 1889, the amount of 
gold bars made was about twenty-two millions and one quarter, 
and of silver bars about six millions and three-quarters at 
coining value. 



86 AMERICAN MONEY. 

In commerce and other intercourse with foreign nations it 
becomes necessary to convert foreign money into our own 
and vice versa. Foreign trade is not conducted by way of 
barter, unless with savages, but is carried on by two sets of 
men, called exporters and importers. The exporter of cotton, 
breadstuffs, provisions; mineral oil, tobacco, &c., is one man; 
the importer of sugar, coffee, tea, dry goods, &c., is another. 
An article exported is sold in the foreign market in the 
money of that country: and it is necessary for the exporter 
to know that the price realized when converted into American 
money and returned to him will leave him a profit, and he 
seeks the best market. So also the importer of a commodity 
buys it in the foreign market in foreign money and it is nec- 
essary for him to know that the price realized at home will 
leave him a profit; and he also, seeks the best market. The 
total declared value of the imports of foreign merchandise 
and of exports of domestic and foreign merchandise for the 
fiscal year ending June 30, 1889 were; exports, $745,131,652; 
imports, $742,401,375. Over half of the domestic exports 
went to Great Britian, while only one quarter of the imports 
came from that country. The imports from Brazil (coffee, 
rubber, &c.,) were $60,403,804; the exports to $9,351,081. The 
imports from Cuba (sugar, cigars, &c.,) were; $52,130,623; 
exports to $11,691,:U1. The imports from the Philippine 
Islands were $10,593,172; exports to $179,647. Imports from 
China $17,028,412; exports to $2,791,128, &c., &c. 

And there was also exported during the above fiscal year 
in excess of the amounts imported, in gold $59,952,285; in 
silver, $36,689,248. The greater part of this went to England 
in the first place. 

Neither the exporter nor the importer concerns himself 
about the balance of trade except so far as it may effect the 
price of bills of exchange. The exporter has foreign bills to 
sell and the importer foreign bills to buy. The importer of 
coffee from Brazil is likely to pay for it by bills on London; 
and the importer of sugar from Cuba probably gets his ex- 
change or Spanish doubloons at the same place. 

The balances in international trade are adjusted by those 
who deal in bills of exchange. The principal international 
clearing house is London. 



AMERICAN MONEY. . 81 

In exercise of the power to regulate the value of foreign 
coin, it was enacted (March 3, 18V3): The value of foreign 
coins as expressed in the money of account of the United 
States shall be that of the pure metal of such coin of standard 
value; and the values of the standard coins in circulation of 
the various nations of the world shall be estimated annually 
by the Director of the Mint and be proclaimed on the first 
day of January by the Secretary of the Treasury. The 
second section of the act fixes the value of the sovereign or 
pound sterling of Great Britain at $4.8665, and declarer that 
this valuation shall be the par of exchange between Great 
Britain. and the United States: and also that all contracts 
made after the first day of January 18 74 based upon an as- 
sumed par of exchange with Great Britain of fifty-four pence 
to the dollar, or four dollars and forty-four and four ninths 
cents to the sovereign or pound sterling shall be null and void. 
This rate of fifty four pence to the dollar was an antiquated 
and fictitious par of exchange, which is said to have had its 
origin in colonial times, when there was a silver standard in 
England and Spanish dollars were current in the colonies. 

The Director of the Mint in making the estimate for the 
year 1889 proceeded as follows: In estimating the value of 
foreign coins, the value of the monetary unit of countries 
having a gold or double standard was ascertained by com- 
paring the amount of pure gold in such unit with the pure 
gold in the United States dollar: the silver coins of such 
countries were given the same valuation as the corresponding 
gold coins with which they are interchangeable. In countries 
having a silver standard the value of silver coins was fixed at 
the gold value of the pure silver contained in such coins 
based upon the average price of silver in London for a period 
embraced between Oct. i and Dec. 24 1888. This price was 
42.911 pence per ounce British standard (0.925 fine), equiva- 
lent at the par of exchange to $0.94 per ounce fine. 

Silver is quoted in London at so many pence per ounce 
(0.925 fine), in gold; in New York at so many cents per ounce 
(fine) in gold. The market price of silver in London fixes 
its value elsewhere. 

This estimate of foreign coins made and proclaimed an- 
nually fixes their value relative to our own for custom house 
purposes and all others. It is called the jDar of exchange be- 



CO AMERICAN M0;N^EY, 

tween this country and the others respectively. Where a 
foreign nation had a double standard its silver coins were 
treated as local and domestic tokens of the country to which 
they belonged. But in the case of Japan its money unit (yen) 
was computed both in gold and silver, with a note appended 
that the silver standard was the one in use. Computed as 
above, the gold yen was worth $0,997 and the silver yen 
$0,734. In assessing ad valorem duties upon an importation 
of Japanese goods, it would be very material whether the yen 
mentioned in the invoice was considered as equal to $0,997 
or only to $0.7-34. In Japan goods were bought and sold in 
terms of the silver yen as the unit of value. 

As the gold dollar or 2.3.22 grains of pure gold furnishes 
both the legal and actual unit of value in this country, the 
computation of the value of foreign coins taking it as the 
basis, was obviously correct. And the value of the standard 
sovereign or pound sterling which consists of llS-g-^^ grains of 
pure gold may be found by dividing the latter amount by the 
former. 

The Director of the Mint, in his report for 1889, p. 31, gives 
a table showing exports of gold bars from May, 1888, to Sep- 
tember, 1889, to the amount of $61,485,989.00, and the price 
of sight exchange at the several dates of shipment. And he 
says, p. 32: "It will be seen that the bulk of the shipments 
to'ok place at dates when exchange was between $4.88-|- and 
$4.89. The cost of transporting- gold bars from New York to 
Europe is about one-eighth of one per cent., and the cost of 
insurance from nine one-hundredths to three-sixteenths of one 
per cent., so that it would not be profitable to ship bullion, 
rather than to buy exchange, if the price of exchange was be- 
low $4.88. As regards shipments to London, the well- 
known fact that the Bank of Ergland pays for gold only 77s. 
9d. per ounce, British standard (0.91 6f fine), while it sells 
gold at the rate of 77s. lO^d., equivalent to a coining charge 
of 1^ pence per ounce, would not induce shipments of gold to 
London. The margin of 1^- pence per ounce, at the Bank of 
England, between the buying and selling prices of gold, rather 
encourages shipment of gold from London, as owners of bul- 
lion in London will accept any price for shipment above 77s. 
3d. per ounce. So that the price of exchange in New York 
would have to be nearly $4.89 before it would be profitable to 



AMEKiCAN Money. 89 

sliip gold to London, for sale to the Bank of England, in pref- 
erence to buying exchange. As a matter of fact, most of the 
gold which recently left this country went to France." 

A sovereign is legal tender in England so long as it weighs 
enough to contain 112.29+ grains of pure gold, so that if a 
draft on England or a debt due there were paid in such light 
sovereigns their value in gold dollars would be $4,836 each, 
instead of $4.8665. And an exportation of gold from Eng- 
land might be prevented by ;^ tender of light sovereigns. An 
exporter hence to England, ^t paid in light sovereigns, might 
find a difiiculty in realizing out of them the par of exchange. 
Gold bars might not sell for the same price for light sover- 
eigns as heavy ones. To provide for this case the exporter 
would have to buy his goods cheaper or sell them dearer. 

If the silver dollar should become the unit of value, then 
the relative value of all foreign coins would undergo great 
alteration, and the section of the statute fixing the English 
par of exchange at $4.8665 would require immediate repeal. 
For denoting the gold dollar by d, the silver dollar by (P , and 
the pound sterling by L, then 

d^=v.d (1) 

L. = 4.8665 X r?=H^.f7i (2) 

V 

During the fiscal year 1889 the average value of silver was 
such as to make r = 0.'72: this substituted in Eq. (2) would 
make the par of exchange between the pound sterling and the 
silver dollar $6,759+. In order to make t; = l, the price of 
sih-er must be $1.29+ per ounce fine. 

The relative bullion value of the gold and silver dollar is 
as follows: If the gold dollar is d, and the silver one d\ and 
the gold price of an ounce of fine silver r. d, then 

,,fc_J«^.,^, (3) 

371.25 ^ ' 

In which, if d=d^ then y' = 1.29+. 

And if r be the ratio of silver to gold as to value for equal 

weights of each, and v .d the gold price of an ounce of pure 

silver, then 

480 1 ,^. 

r=z (4) 

23.22 V ^ ' 



90 AMERICAN MONEY. 

If ?j=1.294-, then ?'=15.9884-,which was the ratio adopted 
in 1837 and now in force. 

Foreign money is worth no more here than its bullion 
value, and so also with our money abroad. A silver dollar 
may pass at home as the equivalent of and as a token for a 
gold dollar, but abroad the value of any coin is no more than 
so much bullion. 

lu Collector v. Richards, 23 Wall, 246, the above act to 
fix the par of exchange was held to be a repeal of all previous 
laws fixing the value of foreign coins and the mode thereby 
adopted approved as being just to all concerned. In Cramer 
V. Arthur, 102, U. S., 612, suit was brought on an alleged over- 
valuation of goods imported from Austria in 1874. The in- 
voice was expressed in Austrian paper florins. The law 
authorized the President to establi.sh proper regulations for 
estimating the value of goods imported in respect to which 
the original cost should be exhibited in a depreciated currency 
issued and in circulation under the authority of any foreign 
government. Such regulation then w;as, that the value of for- 
eign coins as proclaimed was to be taken in estimating custom 
duties unless collectors had been otherwise instructed, or 
unless a depreciation of the value of the foreign currency ex- 
pressed in an invoice from the standard of that country should 
be shown by a consular certificate. The value of the silver 
florin as proclaimed was $0,476 in gold and of the paper florin 
as shown by the consular certificate attached to the invoice 
was $0.4577: these estimates were held to be conclusive upon 
the importer. And it was also held that the law required 
parties to make out invoices in the currency of the country 
where the goods were bought and did not leave it to them to 
make a pretended estimate of the cost in a coin valuation. 
In Hadden et al v. Mei'ritt, 115 U. S., 25, the plaintiffs had 
imported in 1879 from China goods subject to ad valorem 
duties, the values of which goods were stated in Mexican dol- 
lars as the currency of China. The plaintiffs offered to show 
that the value of these dollars as estimated and proclaimed 
was based upon a comparison between them and the American 
silver dollar instead of the gold one, and that thereby the 
goods had been largely over-valued. But the evidence was 
excluded and the value as proclaimed was held to be conclu- 
sive; that it was an executive function and precluded judicial 



AMERICAN MONEY. 91 

enquiry. As the gold dollar furnished both the legal and 
actual unit of value in 1879, it was both illegal and unjust 
to use the silver dollar as the basis of computation. In 1879 
the silver dollar was worth $0,868 in gold: and in using it as 
the unit of value, raised the duties upon these Cliinese goods 
over fifteen per cent. At the value of the silver dollar in 
1889, viz., $0.72 in gold, the duties would have been increased 
nearly forty per cent. 

After the close of the war, in 1865, a contraction of the 
previous paper inflation took place and the paper dollar 
changed from a decreasing to an increasing standard; and pro- 
vision was made by the act of January 14, 1875, for the 
resumption of specie payments by the government upon its 
circulating notes on and after January 1, 1879. The pressure 
caused by the contraction was severely felt after 1873. The 
great demand for more money enabled the producers of silver 
and its other friends to pass, over the President's veto, the act 
of February 28, 1878,which provided: There shall be coined 
at the several mints of the United States silver dollars of the 
weight of 412.50 grains (Troy), of standard silver, as pre- 
scribed in the act of January 18, 1837, on which shall be the 
devices and superscriptions provided by that act, which coins, 
together with all silver dollai's heretofore coined of like 
weight and fineness, shall be a legal tender for all debts and 
dues, public and private, except where otherwise stipulated in 
the contract. And the Secretary of the Treasury is authorized 
and directed to purchase from time to time, silver bullion at the 
market price thereof, not less than two million dollars worth 
per month, nor more than four million dollars per month, 
and cause the same to be coined monthly as fast as 
purchased, into such dollars. Any gain or seignorage 
arising from this coinage shall be accounted for and paid 
into the Treasury. The deviations allowed by the act 
of 1837, and since, are as previously stated. Assuming 
that all silver dollars coined are a legal tender if they 
are within the limits of tolerance, it is probable that they 
cease to be so when reduced in weight below the prescribed 
limit. Under this act there had been coined up to November 
], 1889, in silver dollars, $343,638.001,with their further coin- 
age still proceeding at the lowest limit fixed by the statute; 
the number of dollars coined from time to time being depeu- 



92 AMERICAN MONEY. 

dent upon the current market price of silver. The value of 
the silver dollar had declined from above par in gold in IS^S 
to about $0.90 in 1878. And this new and additional market 
for silver failed to arrest its decline in value, so that in 1889 
the value of the silver dollar was only $0.72, In the mean- 
time the silver product of the United States increased from 
31,550,000 fine ounces in 1879 to 50,000,000 fine ounces in 
1889. 

All efforts made to establish a general free coinage of sil- 
, ver, upon some agreed ratio of value relative to gold, entirely 
failed. Those nations which had adopted a single gold stand- 
ard declined to re-adopt a double standard which they had de- 
liberately rejected, and thus disturb their money systems, in 
order to raise the price of silver for the benefit of its pro- 
ducers. If the adoption of a single gold standard had 
enhanced money, or lowered prices, as contended by the 
friends of silver, the effect was not so apparent or injurious as 
to justify a return to a double standard, which had come to be 
regarded as medieval and antiquated; especially as the great 
increase in the production of silver, and its great decline in 
value, seemed to put the scheme of an international double 
standard in the light of a mere experiment which the result 
might fail to justify, even if all parties should adhere to the 
agreement in good faith. 

The real international medium of exchange is bullion. The 
conversion of one kind of money into another is easy enough 
by the method which has been adopted. This country has a 
far greater tirade with Great Britain than with any other coun^ 
try; and if the pound sterling were adopted as the money unit 
here, or Great Britain should adopt the gold dollar and dis- 
card the pound sterling, neither alteration would be of any 
benefit sufficient to justify the change. The conversion of 
dollars into pounds sterling, francs, marks, &c., is quite easy 
enough. Nobody wants to receive any foreign money as a 
tender in payment of debts or otherwise, — certainly not 
strange coins of ° unknown and unreliable weight and fineness. 
It is unnecessary, and it would be unjust, to compel the people 
to accept light and worn foreign coins under any scheme for 
an international American, or other, monetary union. If the 
other republics upon this continent and South America all 
legislate upon the subject of money as much as the United 



AMERICAN MONEY. 93, 

States, it would be idle to attempt to issue an international 
coin or coins to be used by all of them. Besides any scheme 
for an international American monetary union which shall fix 
" the quantity, the kind of currency, the uses it shall have, 
and the value and proportion of the international silver coin, 
or coins, and their relations to gold," is evidently an attempt 
to tie the hands of all the statesmen and legislators of all 
these republics and forever prevent them from benefiting their 
people by an almost constant legislation about money. The 
Argentine confederation and perhaps others are more con- 
cerned about paper money at this time than any other kind. 
When silver began to decline it would have been a great bene- 
fit to all its producers in both Americas if a general free coin- 
age of silver at the ratio to gold of fifteen and a half to one, 
or thereabouts, could have been brought about by an interna- 
tional agreement to that effect; but the non-jsroducers of silver 
would not concur, and the scheme failed. If all nations 
could agree about money, and adhere to it, then it would seem 
feasible for them to agree in other matters: as, for instance, 
to dismiss their standing armies and live in peace with each 
other. About two thousand years ago, Cicero imagined that 
a time might come when there would not be one law at Rome, 
another at Athens, one law now and another hereafter, but 
that among all nations and during all time there would be the 
same perpetual and universal law. Such time has not yet ar- 
rived. On the contrary, in this country alone, it requires a 
national congress and a legislature in each State to keep the 
governmental machine from creaking upon its hinges. 

The purchase of two millions of dollars worth of silver 
monthly by the Treasury, under the act of February 28, 1878, 
having failed to arrest the decline in the value of silver, its 
friends procured the passage of an act (July 14, 1890) author- 
izing the Secretary of the Treasury to purchase four millions 
and a half ounces monthly, or so much thereof as may be of- 
fered, at the market price thereof not exceeding $1 for :]'71.25 
grains of pure silver, and to issue in payment for such purch- 
ases of silver bullion, Treasury notes of the United States in 
such form and of such denominations, not less than $1, nor 
more than $1,000, as he may prescribe. Such notes to be re- 
deemable on demand in coin at the Treasury of the United 
States, or at the office of any Assistant Treasurer, and when 



94 AMERICAN MONEY. 

SO redeemed may be re-issued, but no greater or less amount 
of such notes shall be outstanding at any one time than the 
cost of the silver bullion and the standard silver dollars coined 
therefrom then held in the Treasury, purchased by such notes; 
which notes are made a legal tender in payment of all debts, 
public and private, except where otherwise expressly stipu- 
lated in the contract, and also receivable for all customs, taxes 
and all public dues, and when so received may be re-issued; 
also the Secretary of the Treasury may redeem the notes in 
gold or silver coin at his discretion, "it being the established 
policy of the United States, to maintain the two metals on a par- 
ity with each other upon the present legal ratio, or such ratio 
as may be provided bylaw." Two million ounces of the silver 
purchased are to be coined monthly until July 1, 1891, after 
which as much as may be necessary to provide for the re- 
demption of the notes, any gain or seignorage arising from 
such coinage to be accounted for and paid into the Treasury. 
Also, "That so much of the act of February 28, 1878, en- 
titled, ' An act to authorize the coinage of the standard silver 
dollar, and to restore its legal tender character' as requires 
the monthly purchase and coinage of the same into silver dol- 
lars' of not less than $2,000,000, nor more than #4,000,000, 
worth of silver, is hereby repealed." 

The act of July 14, 1890, contains no provision making the 
silver dollars to be coined thereunder a legal tender inpay- 
ment of debts: but they are made so, if at all, by that part of 
the act of February 28, 1878, which is not repealed. 

As the amount required to be purchased by this act is quite 
equal to one-half of the total annual product of silver at this 
time, its friends confidently expect that its value will be 
thereby speedily restored to a parity with gold at the present 
legal ratio of 15.988-|- to 1, or to $1.29+ in gold per ounce 
fine. Unless this occurs, the declaration in the act that it is 
the established policy of the United States to maintain 
the two metals on a parity with each other upon the 
present legal or any other legal ratio, will be nuga- 
tory. If the demand for silver is sufficient to make 
its market value $1.29+ per ounce fine in gold, then 
371.25 grains of pure silver will be worth 23.22 grains of pure 
gold, otherwise not. And if not, then they will differ in spite 



AMERICAN MONET. 95 

of the established policy of government as above declared, 
and one or the other will be the actual standard of value. 

According to the Director of the Mint, the countries which 
liave at this time a single standard, or a double one, are: 

Gold — Brazil, Canada, Denmark, Egypt, Germany, Great 
Britain, Liberia, Norway, Portugal, Sw^eden, and Turkey. 

Silver — Austria, Bolivia, Columbia, Equador, Guatamala; 
Honduras, India, Mexico, Nicaragua, Peru, Russia, Tripoli 
and Venezuela. 

Gold and Silver — Argentine Republic, Belgium, Chili, 
Cuba, France, Greece, Hayti, Italy, Japan, Netherlands, 
Spain, Switzerland, and the United States. 

II. 

TOKENS. 

The specie part of the currency consists of standard coins 
and tokens. The value of gold varies directly with its weight; 
hence, if the gold dollar furnishes the unit of value, the 
value of the other gold coins is in proportion to their weight, 
and they constitute the standard coins. All the otlier coins 
are tokens, — their nominal exceeds their bullion value. They 
are the silver dollar, half and quarter dollar, dime, five 
cent piece, three cent piece and cent. By a recent act the 
coinage of the three cent piece is to cease, and the same 
withdrawn; it is not needed. 

The silver dollar is a token because b1\.25 grains of silver 
are worth less than 23.22 grains of gold. If silver should be- 
come worth $1.29-]- per ounce tine, in gold, then the silver 
dollar will be a standard coin. Or, if it shall drive out of 
circulation the gold coins, then it will be a standard coin 
whether it is of equal bullion value with the gold dollar or 
not; for in such case the silver dollar will then be the actual 
unit of value. During the fiscal year ending June 30, 1889, 
the average value of the silver dollar was |0.72 in gold: it 
has always been worth less than a dollar in gold ever since 
1873. 

The fractional silver coins and their standard weights are: 
the half dollar, weight 12^ grams (192. n grains); the quarter 
dollar and dime weighing, respectively, one-half and one-fifth 
the weight of the half dollar. They are a legal tender at their 



96 AMBRICAN MONEY. 

nominal value in all sums not exceeding ten dollars, in full 
payment of all dues, public and private. 

The minor coins and their weights are: live cent piece, 
weight 11.16 grains: three cent piece, 30 grains; cent, 48 
grains. The two former are composed of an alloy, consisting 
of 75 per cent, of copper and 25 per cent of nickel; and the 
cent of an alloy of 95 per cent of copper and 5 per cent, of 
tin and zinc in proportions to be determined by the Director 
of the Mint. Thej^ are a legal tender at their nominal value 
for any amount not exceeding twenty-five cents in any one 
payment. 

Also, the fractional silver coins when presented in sums of 
twenty dollars, and the minor coins when presented in sums 
of not less than twenty dollars, are redeemable in lawful 
money at the Treasury or any of its offices; and if wanted, 
can be obtained there in exchange for other money. 

The fractional silver coins were reduced to tokens by the 
act of 1853. By the act of 1873 their standard weight was 
slightly increased for the purpose of bringing them into con- 
formity, as to content of silver, with the five franc coin of the 
Latin Union, and the money units of several states in Central 
and South America. If this change had caused their use 
abroad they would return home as worn and light coin, to be 
recoined at the public expense. They weigh less, and are 
worth less, in proportion, than the silver dollar. And the 
object to be attained by fitting a local and domestic token for 
foreign circulation is not apparent. 

The minor coins are made of base metal and of a conven- 
ient size, foi' good reasons. If made of silver they would be 
too small; and if made of base metal enough to represent 
thair nominal value, they would be too large and heavy. 
Small money must not be too small nor too large, but of a 
size convenient for common use. Their nominal is much more 
than their bullion value; but their power as legal tender is 
limited as above stated. 

Such money is a necessity, in order to pay sums in full to 
the extent of one cent, and also to admit of retail in small 
sums. Without cents the daily newspaper could not be sold 
for one or two cents. And in view of the variable value of 
silver, the fractional silver coins are well enough as they are. 
Both kinds, if redundant, are redeemable in lawful money, 



AMERICAN MONET. 97 

and are therefore a credit currency as well as tokens. The 
silver dollar, while silver remains below •j;i.29+ per ounce 
tine, in gold, and the gold dollar continues to be the unit 
of value, is a mere token. 'J'his fact is not altered because 
silver dollars are unlimited legal tender for all debts and dues 
except where otherwise stipulated in the contract. In July, 
1864, Avhen gold was-S2.S5 in paper, the fact that a greenback 
dollar, worth about $0.36 in gold, was a legal tender for a dol- 
lar, did not make the paper money equal in actual value with 
the coin. In the circulation the silver dollar occupies the 
place of a gold dollar, and as a token represents it with- 
out being redeemable into it. Silver dollars were coined be- 
yond the number which would circulate in specie, for two 
inconsistent reasons: in order to help the price of silver, and 
to make money cheaper. Both of these objects are expected 
to be realized by the recent act. 

III. 

TFIE MEDIUM OF EXCHANGE. 

Money operates as a medium of exchange. If the money 
unit is f?, and any article or quantity of wealth is w, and an- 
other is s, then 

io^r.cl (5) 

z=c\d (6) 



between Eqs. (5) & (6) 



and by eliminating d 



(7) 



which expresses the relative exchange value between ic and 
z. And if prices are quoted in two money standards, the par 
of exchange readily converts one into the other. 

Under date of March 22, 1890, wheat was quoted in Liver- 
pool as follows: California club 7s. 2|d.; No. 2 red winter, 7s.; 
No. 2 spring, 7s. 3^d.; No. 1 Bombay, 7s. ^d, ; Kurachee red, 
6s. 4d., &c — with a difference between "spot" and " futures." 
Also bacon, long and short clear, 30s.; Cumberland cut, 31s. 
9d.; hams, long cut, 45s. 6d,. Also, in New York same date: 



98 AMERICAN MONET. 

Sugar — Raw Muscavado, 87 test, 4|-c. refined, y^^c. lower; 
extra C, 5^^ to 5fc.; white extra C, 5J| to 5-i-|c.; yellow, 
4|| to 5 Ac; off A, Sf to 5|c.; mold A, 6fc.; standard A, 
6-^c.; confectioners' A, Sjlc..; cut loaf, YAc; crushed, 'ifVc; 
powdered, V/ec; granulated, 6^c.; cubes, 6fc. 

In this way different commodities are quoted in the market 
according to their various grades and "qualities. And from 
the market prices ruling at any market, their relative exchange 
value for that raai'ket and that date could be figuered out. 
But such quotations require a money standard reasonably well 
fixed and invariable. Other things being equal that would 
be the best and most reliable market which had the best sys- 
tem of money. During the great rebellion this country had 
an elastic and variable standard and currency all of paper. 
-And the price in paper of such a staple article as gold coin 
was very giddy. During June, 1864, the value of the gold 
dollar varied from $2.50 to 11.93 in paper; and during July, 
1864, from $2.8.5 to $2.22. 

If the standard undergoes variation, as in the case of a 
paper inflation or otherwise, then c^in Eqs. (5) and (6) becomes 
an unknown quantity. And experience proves that the var- 
ious articles of wealth do not immediately respond to the ex- 
pansion of the currency, but begin to rise in price at differ- 
ent times, and move with different degrees of rapidity. The 
same irregularity occurs in a contraction. These effects were 
clearly, apparent during the civil war and afterwards. 

Under such a state of things both r and /'^ vary independ- 
ently, and the alteration which occurs in d is referred to a 
change in the value of n^ and z: and the more rapid the infla- 
tion or contraction, the more variable values become. In 
such case the unit of wealth and value is entirely indefinite, 
and is of all sizes, as represented by 

^=— : d=— : &c. Ac. (8) 

A standard of this kind during the suspension of specie 
payments in England consequent upon the wars of Napoleon 
was defined as "an ideal unit in terms of which the relative 
values of all commodities maybe computed," and as "express- 
ing a sense of value in reference to currency as compared to 
commodities." While such an ideal unit might convey " a 



AMERICAN MONEY. 99 

sense of value," it would fail to furnish a means by which 
the relative values of commodities could be computed with 
any accuracy, for the reason that they do not vary in price 
uniformly with the changes in the standard. Such a state of 
things suits the speculator — the market represents chaos, and 
merchants become merely gamblers. Besides, creditors are 
impoverished by the inflation; and afterwards, debtors, by 
the collapse, contraction and decline. 

A system of money, in order to perform properly its function 
as a medium of exchange, should be based upon a standard 
made as invariable as possible. Commodities are measured by 
the bushel, pound, gallon, yard, &c., and their value as per unit 
of quantity to the fraction of a cent, penny, &c., is measured 
according to all the different gl'ades and qualities by the 
value of the money standard. And the same reason exists 
that it should be fixed and remain so as that the foot, yard, 
pound, and other measures of quantity, should remain unal- 
tered. It is contrary to experience, and indeed absurd upon 
the face of it, that all the immense variety of articles, each 
one of various grades and qualities, would simultaneously and 
immediately respond to every alteration of the standard, as, if 
it be unreal, fictitious, unstable, elastic, flexible, &c.; or, that all 
values would instantly change m due proportion to it. Among 
barbarians where barter is practiced, length may be measured 
by a man's foot, or in paces, or fathoms, and quantity by the 
handful, <fec. But civilized men require something more 
definite. The precious metals could be hardly used as money 
when both their weight and fineness were guessed at. 

The law regards it as a great crime to make false or coun- 
terfeit money, or to deface, mutilate, impair, diminish, falsify 
scale or lighten the coin. But in fact these are small offenses 
when compared with an alteration of the standard itself, as 
by debasing it, or by substituting another of different value 
in its place, or by an inflation of the currency. It would be 
just as honest, and no more injurious, to tamper with the foot, 
pound, yard, and other units of common measure. 

After values have become adjusted to a system of money, 
tokens, and other substitutes for the money itself, are often 
brought into use and made to operate as a part of the circu- 
lating medium. And this fact has given color to the idea that 
anything which can be made to circulate is good enough for 



100 AMERICAN MONET. 

a medium of exchange. In the days of State banks and gen- 
erous confidence, a hotel cook in New York started a fictitious 
bank, located nominally in Wisconsin, but really in his 
kitchen. After printing $100,000 in notes, he made a con- 
tract with a money dealer to redeem them in New York at 
five per cent, discount, and to quote them as good at that rate 
in his "bank note detector." This was at that time a fair 
rate of discount on State bank money that far away from 
home. After a large amount had been put into circulation, 
the cook disappeared, leaving the medium of exchange fur- 
nished by him to render service to the country along, with 
other paper money more lawfully authorized, but in fact of 
little greater value. Like wheat, provisions, sugar, &c., paper 
money may be of all grades and qualities. In the above case 
it lacked a redeemer. In other cases there may be such a 
person, ostensibly, but without the specie needed for the pur- 
pose, or he may be located in some out of the way place and 
hard to find. Or the paper money may be secured by govern- 
ment bonds as to its ultimate payment after the bank of issue 
is wound up by a receiver and the bonds are sold, and in the 
meantime redemption, if demanded, is made difiicult and ex- 
pensive. Or the paper money may be greenbacks with every 
facility offered to get the specie, and the best kind of specie, 
thereon; or, of coin certificates, where the coin lies in the 
Treasury until the certificate is presented for payment. Or 
the paper money maybe Treasury notes issued for the pur- 
chase of silver, redeemable in coin at the Treasui-y or any of 
its oflices with the silver purchased lying in wait to make 
good the promise of payment engraved upon the notes. 

All sales take place upon the basis of an exchange of equiv- 
alents: and the price received ought to retain its value until 
the holder may see fit, at his own convenience, to make use of 
it. Money ought to be durable; one of the chief merits of 
the precious metals is their durability. The proper medium 
of exchange is standard coin and such paper substitutes for it 
which may be always convertible into specie without cost or 
delay. Then thrift and industry are encouraged; savings can 
be made and stored up without fear of loss. When confid- 
ence exists the people deposit a large part of their savings 
in banks where it may be safely kept and profitably used. But 
if the money consists of bank bills and other tokens for 



AMERICA>r MONEY. lOi 

money, a currency panic is liable to occur and a large part of 
the money prove to be worthless. The currency ought to be 
such that the reserves of the banks and of individuals micfht 
be entirely trustworthy. The superstructure of credit requires 
a secure foundation. 

A system of money ought to be such that a currency panic 
would be impossible. Such a one would be a currency com- 
posed entirely of gold; or, if silver were the standard, then 
entirely of silver. In either case, no one could get into a 
fright about the goodness of his money. Not so, if the cur- 
rency consists mainly of tokens or of bank bills; for the 
tokens may cease to be current, or the banks fail or suspend 
payment. With the best kind of money a credit panic might 
occur. That is, a fright, not about the goodness of the 
money, but about getting it. Banks of deposit may fail to 
pay their depositors and debtors fail to pay their creditors 
but if the money is good somebody will have it; and property 
will not be sold for a mere song. A combined currency and 
credit panic is fatal to all business and nearly all wealth. 
the labor of a lifetime may become a total wreck at once. In 
such case there is neither money nor credit. A currency 
panic is very liable to culminate into one of the combined sort 
Behind it follows grief and poverty. Hence the importance 
of a currency about which there can be no fear. 

If anything which will operate ^s a medium of exchange is 
good enough for money, then an inconvertible paper currency 
issued out of the public treasury and made a legal tender, is 
the best kind. It would be cheap, light, and entirely free 
from loss by Avear. There would be no expense or trouble in 
redeeming it, exce23t to issue a new bill for an old one. Such 
was the currency of this country previous to the resumption 
of specie payments in ISYO, when the whole of it, even to 
five cents, was in paper. The credit panic of 1873 occurred 
during this period. The banks failed to pay their depositors 
on demand, and other debtors failed to pay also. But there 
was no panic about the paper money. Bank bills had been 
inconvertible ever since 1861; and the ultimate payment of 
national bank notes was secured by government bonds. The 
objection to such a currency is that expansion is too easy and 
is liable to be too popular. Money cannot be made too abun- 
dant for debtors and speculators. But the amount of a specie 



102 AMERICAX MONEY. 

currency has its limits; when it becomes redundant, exporta- 
tion takes place. 

At this time the currency consists of the fractional and. 
minor coin, gold coin, silver dollars, United States notes 
(greenbacks), Treasury notes, national bank notes, and coin 
certificates. 

Gold certificates are issued out of the United States Treas- 
ury for gold coin, and silver certificates for silver dollars de- 
posited there, and are made payable to the bearer in the kind 
of coin deposited, which is required to be retained in the 
treasury in order to redeem the certificates issued thereon 
when presented for payment. Coin certificates and also 
greenbacks are redeemed by the Treasurer or any assistant 
Treasurer if not mutilated, otherwise by the Treasurer only 
according to certain regulations concerning mutilated paper. 
Both kinds of certificates are receivable for customs, taxes, 
and all public dues, and when so received are to be reissued. 
The gold certificates are issued in denominations not less than 
twenty dollars and upwards, to correspond with the United 
States notes. The silver certificates are issued in ones, twos, 
fives, tens and upwards, to correspond with the United States 
notes. The amount of the silver certificates on September 1, 
1890, was $808,423,071; gold certificates, $157,388,269. 

United States notes, or greenbacks, are in such form and 
for such amounts as the Secretary of the Treasury may pre- 
scribe, do not bear interest, are payable to the bearer at the 
Treasury, and are lawful money and a legal tender for all 
debts, public and private, except duties on imports and inter- 
est on the public debt. Their total amount is, as fixed in 
1878,1346,681,016. One hundred millions of dollars in gold 
is retained in the treasury as a fund for their redemption, and 
when redeemed they are to be re-issued and kept in circula- 
tion. They have been issued in denominations of $1, $2, $5, 
$10, $20, $50, $100, $1,000, $10,000. 

The Treasury notes to be issued for the purchase of silver 
under the recent act, have been already mentioned. 

National bank notes are issued in circulation by banks or- 
ganized under the national free banking system. The notes 
are prepared and issued to the banks by the United States 
Treasurer to an amount not exceeding ninety per cent of the 
value of the United States bonds deposited with the Treas- 



AMERICAN MONEY. 103 

urer as security for the redemption of the notes. Each 
bank is required to keep on deposit with the Treasurer an 
amount in laAvful money equal to five per cent of its circu- 
lation for its redemption, if presented in amounts of one thou- 
sand dollars or any multiple thereof; otherwise payment must 
be demanded at the counter of the bank during business 
hours; if not paid a protest is necessary and a report made 
to the Comptroller of the Cui'rency at Washington, who has 
thirty days allowed to him to inquire into the facts and decide 
what to do. Since these banks number more than three thou- 
sand, scattered all over the country, no one, unless a banker, 
would be likely to have as much as one thousand dollars in 
the notes of any one bank. If redemption were sought for 
any less sum the bank might be one thousand miles away. 
These provisions are evidently intended to make redemp- 
tion costly and difficult. It is a method to evade pay- 
ment and enable the banks to enjoy the benefit of their circu- 
lation without disturbance. National banknotes are receiva- 
ble for all public debts and demands due to the United States 
except duties on imports. 

Ever since it was seen that the National Government could 
lawfully emit bills of credit in a form suitable for common 
use as a medium of exchange, there has been no reason for 
the existance of bank notes. A greenback is redeemed in 
gold at the Treasury, and if not mutilated at any of its offices, 
while a national bank note is redeemable in any kind of 
lawful money in manner as hereinbefore stated. Even if bank 
notes were always redeemable without any cost or delay, such 
purely theoretical bank notes would be no better than a coin 
certificate or United States note. The average circulation of 
bank bills from 1862 to 1890 was over three hundred millions 
of dollars. If the people had used their own notes, instead 
of this bank paper, they would have saved the interest upon 
the above amount for all that time; and during a part of it 
they paid interest at the rate of seven and three-tenths per 
cent, per annum, and for a longer time at six per cent, per an- 
num. Taking five per cent, as the average rate, the people 
would have saved by the use of their own notes, in lieu of 
bank paper, over fifteen millions of dollars annually during 
the whole of the above period. Instead of this, they admin- 
istered an elaborate and expensive ^ree banking system for 



104 AMERICAN MONEY. 

the benefit and profit of the private owners of these banks of 
issue and donated to them annually the above vast sum, which 
Justly belonged to the people themselves. 

Fortunately, the field of circulation occupied by bank note& 
has been needed, or supposed to be so, for the silver certifi- 
cates heretofore issued, and hereafter for the Treasury notes to 
be issued for the purchase of silver under the recent act. All 
schemes to alter the National banking law so as to admit of 
bank infiatlon, have been nipped in the bud by the friends of 
silver. So that the prosiDect now is. that in a few years, bank 
notes will entirely disappear, and the currency will be no 
longer a source of private gain. 

A currency consisting of gold coin and gold certificates 
would be almost panic proof. If the National Treasury lost 
the gold upon which the certificates were issued, the whole 
people would be liable for the loss. And even if such a cur- 
rency were composed of United States notes, in lieu of gold, 
to the extent of about three-fifths of its sum total, it would be 
quite safe and reliable, and at the same time more economi- 
cal. 

The currency as it now exists carries the silver dollars, silver 
certificates and National bank notes as so many tokens for a 
gold dollar. If the recent act for the purchase of silver shall 
cause a sufticient inflation, a change of standard will occur. 
The same may be said of the free coinage of silver, or an ex- 
cessive issue of bank notes or Treasury notes. The effect of 
such a change of standard will depend very much upon the 
gold price of silver at that time 

After the silver dollar shall become the standard, and all 
values have been adjusted to it, then silver dollars and Treas- 
ury notes issued for the purchase of silver, will make a cur- 
rency quite panic proof. But the probability is, that in such 
ease not a few who had incurred debts in silver dollars, would 
want to pay back something cheaper, and call for legislation 
to that effect. 

IV. 

THE VOLUME OF THE CUERENCY. 

All the uses for money require a certain amount of it to sat- 
isfy a permanent and unexcited demand. In estimating this 
amount, it is not sufiicient to include in it only the money 



AMERICAN MONET. 105 

which is, or is supposed to be, in active circulation. As a 
store of wealtli, money is just as mucli needed as for a medium 
■of exchange. The money held by banks, railroads, insurance 
companies and other corporations, trustees, dead men's estates, 
and privatelj^ among the people is all a necessary part of the 
total amount required. 1 he State and National treasuries re- 
quire some money to be constantly on hand. Even the money 
which a man carries in his pocket, if allowed to stay there, is 
not in active circulation. If money were made too poor to 
keep, so that everyone would be afraid to hold it over night, 
its circulation might be more active and a less amount of 
it sufficient. But if it be composed of gold coin, a large 
part of it is liable to lodge somewhere in the hands of the 
people, and in various eddies and pools. According to the 
Director of the Mint, on July 1, 1889, the National banks held 
in gold coin $73,907,610; other banks and the people, |293,- 
829,958. Very little of this is seen in circulation: it lies at 
the bottom of the reserves. It is regarded as trustworthy and 
reliable in a time of extreme need. Silver is too bulky for 
hoarding purposes, and paper is too perishable. 

Ever since 1878 the currency has been upon a gold basis, 
and in part composed of that metal. It is a product of this 
country to the extent in value of about thirty three millions of 
dollars annually. Deducting about one-third of this amount 
for the quantity annually consumed here in the industrial 
arts, the residue remains for use as money or for exportation. 
When the currency is redundant, gold is exported, and when 
deficient, it is imported. These are the limits of the fluctua- 
tion in the amount of the currency arising from natural causes. 
Casual demands for money affect the rapidity of its circula- 
tion and the rate of interest. Excessive speculation in stocks, 
or other commodities, may cause a great stringency in the 
money market. Very often, in such cases, the lame ducks 
raise such a cry that it sounds like a panic, and the National 
Treasury is called upon to interfere, and make money easy for 
their benefit. 

Even when the currency is redundant and the exportation of 
specie is going on, great complaint is made about the scarcity 
of money. Speculators for a rise want money very abundant 
and the articles dealt in scarce. Debtors always complain of 



106 AMERICAX MONEY. 

the scarcity of money, especially if they are short of collat- 
erals. And all those who have no money want some. There- 
fore the constant cry for more money is no proof that its 
quantity is deficient. 

If money is made redundant by thrusting into the circula- 
tion more than is really needed, its value declines, and the 
metallic part is exported until the excess is disposed of. 
Previous to the late civil war, a large part of the specie was 
continually driven off by excessive issues of State bank notes- 
The war inflation caused all the specie to disappear, except a 
certain amount in gold needed to pay duties on imports. Up 
to 1889 there had been coined, in gold, 11,010,900,324; in sil- 
ver dollars, $8,031,238; in fractional silver coins,$214,554,683; 
and yet all the money at that time in common use was of pa- 
per. Up to June 30, 1889, there had been coined at the mints, 
in gold, $1,500,666,297; in silver dollars, $341,533,888; and in 
fractional silver coins, $225,757,363.45. Only about one-third 
of the gold, and also of the fractional silver coins are now in 
the country. Paper inflation in time past expelled even the 
small silver tokens. In order to make specie abundant, it is 
not enough to run the mints hot. 

In any system of money two things must be kept in view, 
to wit: the money unit and the currency volume. If money 
be made artificially, very abundant, the dollar will grow small 
in proportion: l)ut the value of the standard coins cannot be 
carried below their exportable value. With an exclusively 
paper currency the value of the money unit may be carried by 
inflation to a nominal amount, as in continental money, assig- 
nats, and the like. 

The nxmierical amount of the currency has a definite rela- 
tion to the magnitude of the money unit. For it is obvious 
that if such unit were a cent, the same quantity of money 
would be numerically one hundred times as great as if the 
unit were a dollar; and that if the unit were an eagle, would 
be only one-tenth as much. If the money unit be denoted 
by d,sdl the money by 7i. d, and the volume of the currency by 
U, then 

T =«. a (9) 

In which if U is constant, d varies inversely with n. 



AMERICANS MONEY. 107 

The limit of iuflation of a currency having a metallic basis 
being the exporting point for the standard coins, it follows 
that if the money unit were altered in size from d to d^, so 
that d^ — r. d, then 

V=,i.d=n\d' :7i'=— (10) 

If d were the gold dollar and d^ the silver one, and i: = 0.l2, 

then ji'^ = = ?^X1.394-. That is to say, if the volume of 

the currency were filled up with silver dollars worth |0.72 in 
gold, to the exporting point for silver dollars, it would require 
an increase in the number of dollars to the extent of over 
thirty-nine per cent. This is the same as to say that if 371.25 
grains of pure silver were the unit of wealth, and its value 
10.72 in gold — being its average value during 1889 — then the 
same wealth would measure about thirty-nine per cent, more 
in nominal amount Avhen measured thereby, than if measured 
in gold dollars — credits excepted; as to them, the smaller the 
dollar the smaller the debt. After the same manner as 
above, it appears that a ninety cent standard would allow of 
an inflation to the extent of about eleven percent.; an eighty- 
five cent standard, to the extent of about seventeen per cent.; 
the smaller the standard, the greater might be the inflation. 

But if 371.25 grains of pure silver were worth a dollar in 
gold, viz., if silver were worth $I.29-|- per ounce fine in gold, 
then (Eq. 10) d=d^ : n=n^. In such case the nominal amount 
of the money would be the same by either standard, and 
wealth would measure the same in amount by the one dollar 
as the other. And money would be no cheaper nor abundant 
with such a silver standard than with a gold one. Silver 
dollars would be then exported as readily as gold coin. This 
state of things is hoped for by the producers of silver. On 
the other hand, debtors and speculators want money abundant 
and cheap: they want the dollar made smaller. 

If the currency be metallic, and its volume so full that 
specie is exported, then the standard coins are at their bullion 
value: for other nations use their own systems of money. 
Bullion is not suitable for a medium of exchange; it requires 



108 AMERICAN MONEY. 

division into parts with the proper authentic stamps thereon, 
to indicate its purity, weight and value. Hence money may 
have, if it be deficient in quantity, a greater value than the 
bullion contained in it. Owing to this fact, it has bet^n be- 
lieved that if a certain part of the precious metal were ex- 
tracted out of the standard coins, they would have the same 
value as before; that, in fact, their use value as money, would 
make good their loss in bullion value. Acting upon this 
pleasant and lucrative idea, currencies have been, at various 
times, greatly debased. But this left an opportunity for infla- 
tion, and the precious metal extracted being used for that 
purpose, the result was to sink the value of the money. Un- 
der the act of 1878 for the monthly purchase and coinage of 
silver into dollars, they occupied the place of the same 
number of dollars in gold and passed as tokens for them. 
Hence it might be said that the silver dollars acquired a 
use value as such tokens which nominally at least made up 
their shortage in bullion value. According to this reasoning, 
if these dollars had been made out of base metal or even 
leather instead of silver, and they could have been made cur- 
rent, they would have answered the same purpose as if made 
of silver. If a silver dollar of the bullion value of $0.72 in 
gold will pass at par, why not a dollar made out of some 
material only worth one 'cent or less? Whatever token dol- 
lars may be really worth, if they were increased continually 
and would remain current, they would first expel all the stan- 
dard coins and afterwards cause the value of the money to 
sink until such tokens became worth only their bullion value. 
In other words, the token dollar would finally become the 
standard and furnish the unit of value. 

From the foregoing it is quite evident that inflation of the 
currency depreciates the value of the money unit, and that 
contraction produces the contrary effect: also, that any altera- 
tion made in the standard, admits of a corresponding change 
in the currency volume. 

At this time, the gold dollar is the standard, and the volume 
of the currency cannot be inflated beyond the point where the 
exportation of gold sets in, until after it is driven away. How 
much money now constitutes the volume of the currency? 
On November 1, 1889, all the money, including therein bul- 



AMERICAN MONEY. 109 

lion in the mints and assay offices, was, as given by the Director 
of the Mint and the Comptroller of the Currency: 

Gold coin $ 619,640,450 

Gold bullion, . 64,554,236 

Silver dollars 343,638,001 

Silver bullion 10,918,171 

Fractional silver coins 76,628,781 

Minor coins 18,758,228 

United States notes 346,681,016 

National bank notes 202,023,415 

Total $1,682,842,298 

From this total is to be deducted one hundred millions of 
dollars in gold held in the Treasury as a fund for the redemp- 
tion of the United States notes, and which is counted twice 
in the above statement; also, there is to be deducted not less 
than twenty millions of dollars in fractional silver coins lying 
in the Treasury uncalled for. Deducting these two items from 
the above, leaves the total amount of money at $1,562,842,298, 

On July 1, 1889, the paper money was: 

Gold certificates 1154,048,552 

Silver certificates 262,629,746 

United States notes 346,681,016 

National bank notes 202,023,415 

Total ..$965,382,729 

So that the relative amounts of coin and paper were: 

Specie $ 597,459,569 

Paper 965,382,729 

Total $1,562,842,298 

Of the paper money, $448,704,431 was a credit currency; 
the residue represented specie on deposit in the Treasury. 

Besides the surplus in the Treasury in excess of the amount 
needed to meet ordinary demands, there was also an amount 
to the extent of five per cent, of the bank note circulation 
held to redeem it as before mentioned; also, an amount held in 
lieu of bonds deposited by the banks to secure their circula- 
tion, and which had been withdrawn, and which on October 
31, 1889, was $71,816,130. When bank notes were presented 



110 AMERICAN MONEY. 

for cancellation, the)^ were paid out of this fund. By the 
recent act for the purchase of silver, this fund has been abol- 
ished and the bank notes, when presented for cancellation, 
.are to be paid out of the general cash in the Treasury. The 
' amount of this fund on Sept. 1, 1890, was 155,059,296. This 
money, when put in circulation by the purchase of bonds or 
otherwise, was expected to ease the money market and help 
speculation, especially in silver bullion. The excess of frac- 
tional silver coins lying in the Treasury uncalled for was 
caused by a speculation in trade dollars which were put upon 
the Treasury at a profit, under an act passed for the purpose- 
No other use could be made of them except for coinage into 
small money. 

If the money system were more simple the currency might 
possibly consist of a smaller amount. But with a people rich 
enough to afford the best kind of money, economy as to its 
amount is a secondary consideration. If a currency based on 
gold is the best kind, it would constitute no objection to it 
that every old woman in the country had at least one eagle 
safely nested somewhere. Poor money is poor economy; and 
the saying that poor people have poor ways is especially ap- 
plicable to money. Poor money is only suitable to pay toll 
on the road to the poor house. 

Assuming that the sum of $1,562,842,298 is all needed at 
this time for some purpose or other — and if it were not some 
of the gold coin would be exported — then the requisite amount 
per head is about twenty-five dollars. As population increases 
the currency volume will increase. Hence, if population in- 
creases hereafter at the rate of two millions of people per 
annum, a yearl}' increase of about fifty millions of dollars 
will be continually required in order to keep the volume of 
the currency brimming fall. A moderate estimate would be^ 
perhaps, twenty dollars per head, involving a necessary an- 
nual increase of forty millions. Before the rebellion, in 1860^ 
the currency amounted to about fifteen dollars per head. But 
the people were much poorer then than now; they had always 
theretofore been kept poor by broken banks and dishonest 
money. 

The annual amount of Treasury notes to be issued for the 
purchase of silver under the recent act, will depend upon its 
price, probably over sixty millions. Cut the excess of this 



AMERICAN MONEY. 11] 

amount over the increase annually demanded by the growth 
of the country will cause no inflation of the currency imtil 
after the bank notes are all withdrawn; nor thereafter, until 
all the gold coin is exported or hoarded. 

The JB'armers' Alliance, which has become powerful enough 
at the polls to be very dangerous to present and prospective 
statesmen, demand by their national platform recently adopted 
" the unlimited coinage of silver, the abolition of national 
banks, and the issue of Treasury notes in lieu of national 
bank notes, in sufficient volume to meet the business demands 
of the country and the constantly increasing demands of 
trade." 

This platform is sound as to bank money. The national 
Treasury can fully supply all demands for paper money in the 
form of coin certificates, treasury notes, or greenbacks. Con- 
gress can tamper quite enough with the currency without any 
assistance whatever from thousands of banks of issue con- 
ducted by private enterprise under anj- banking law, State or 
national, and free or otherwise. 

The demand for the free coinage of silver, and also for the 
issue of Treasury notes in addition, indicates that this Alli- 
ance regard an annual increase to the curi-enc}^ of over sixty 
millions of dollars as an amount entirely too small to suit 
their views. The history of paper money might be studied to 
a good advantage by these farmers, who want abundant and 
cheap money now, and not at some indefinite time in tlie 
future as a slow consequence of the recent act for the purchase 
of silver. 

As there is now no fund actually existing for the redemp- 
tion of the bank notes, they might be lawfully redeemed by 
an issue of greenbacks or other Treasury notes under an act 
passed for the purpose. But if the farmers, or "the growing 
demands of trade," require an additional amount, how can 
the bills of credit be lawfully emitted? 

After the treasury surplus is exhausted perhaps they might 
be paid out for pensions. Some " loyal " platforms declare 
that the country owes the ex-soldiers a (money?) debt so great 
that it never can be paid. And a governor bearing the mar- 
tial name of Fifer is reported to have named at a soldiers' re- 
union the sum of Ihree hnndred millions as a quite reasonable 
amount to be paid out annually for pensions. After the limit 



112 AMERICAN MONEY. 

of taxation is reached, perhaps the ex-soldiers might consent 
to take notes in part pay on account of the balance due to 
them. 

Others, less loyal, have advocated a loan office at the Treas- 
ury for the benefit of the poor farmers, for whose benefit bills 
■of credit should be issued upon real estate security at a nom- 
inal rate of interest to all applicants. This plan is much 
favoi'ed by the wealthy owners of the Pacific railroads, who 
desire to have the government debts thereon reduced in their 
rate of interest from six per cent, per annum to two per cent, 
or less. 

The platform of the Farmers' Alliance leaves it quite in- 
definite as to the amount of Treasury notes which would be 
sufficient, in addition to the free coinage of silver, " to meet 
the business demands of the country and the constantly in- 
creasing demands of trade." Probably the amount demanded 
is a quantity such that no one could complain of the scarcity 
of money. Some agricultural platforms have named fifty 
dollars per head of the population as about the correct amount. 
Why not say five hundred and make money easy at once? 
Money must be very scarce now when the treasury is com- 
pelled to pay over twenty-five per cent, premium for four per 
•cent, bonds having only a few years to run, and aft offer to 
prepay a j^ear's interest upon the public debt is very slowly 
accepted. The farmers might well question the right of the 
Secretary of the Treasury to wet-nurse Wall street. Why 
should soothing syrup be applied there exclusively and the 
cries of the poor farmers be allowed to pass wholly unheeded? 

V. 

MONEY AS A STORE OF WEALTH. 

According to the report of the Comptroller of the Currency 
for 1889, the deposits of individuals were: 

In National Banks $1,475. 46 <,560.3Y 

State Banks 507,084,481.00 

Loan and Trust companies 299,612,899.00 

Savings Banks 1,444.391,325.00 

Total 13,726,556,265.37 

The deposits in savings banks as above, consisted of "sav- 
ings deposits," excepting $19,160,976 due on demand to other 



AMERICAK MONEY. 113: 

individual depositors. To the above may be added all the 
money stored away privately among the people. ; 

Wealth is not saved and hoarded up in perishable products,, 
such as butter, cheese, beef, pork, grain, goods, &c., but in 
money. And for use as a store of wealth, money ought to be 
composed of some durable material, so that savings will not 
spoil, sour, grow musty or rotten, or otherwise lose their 
value. All wages are paid and saved in money; and savings 
usually accumulate in small sums, to be afterwards invested 
in houses, lands, bonds, stocks and other property. 

Hence the necessity for good and durable mone}^ It ought 
to be not only good to use as a medium of exchange, but also 
to lay away as a store of wealth against sickness, old age, 
misfortune, or a wet day. A man who has saved up a store 
of such material is never without friends. 

If the right kind of money is in use among the people, it 
will continually accumulate in their hands. It is said 
that the hoards of the French peasantry paid the one thous- 
and millions of dollars in gold, demanded by the victorious 
Germans. England adopted a single gold standard in 1816, 
and has since adhered to it. There wealth is great. The 
lender seeks a place where the rule is, with what measure ye 
mete, it shall be measured to you again; and he is satisfied 
with a less rate of interest. Here the money has been upon a 
gold basis ever since 18Y8, and the country has prospered to 
an extent unknown before. Indeed there has been no cur- 
rency panic since 1861. 

Any such figures as those above given were impossible in 
the days of State bank money. Such a superstructure of 
credit requires a solid foundation. With a dishonest currency 
what would become of the mass of wealth represented by the 
above figures? If the money were worthless and the banks 
suspended and insolvent, all this wealth would vanish like 
the baseless fabric of a vision. There are no statistics to 
show how much wealth must have perished in the currency 
panics of 1809, 1819, 1837, &c. Those who held the notes 
of the Farmers' bank of Gloucester, hereinafter mentioned, 
to the extent of $580,000 and lost it all, furnish an illustra- 
tion. At a certain time before the great rebellion a friend re- 
ceived three hundred dollars in bank notes for farm products, 
and in a few days afterwards the money was worthless. The 
bank or banks had failed. 



114 AMERICAN MONEY. 

The amount of the above deposits tells a tale of industry 
and economy. It embodies a vast amount of toil. It repre- 
sents the hopes and expectations of a vast number of people. 
These deposits were made upon the faith that the money 
would stay good, and would be repaid in money equal in actual 
as well as nominal value with that deposited. A difference of 
one cent in the money unit would make a difference in these 
deposits of |3'7,2(i5,562. If a change of the standard hereaf- 
ter occurs the difference will probably be much greater than 
one per cent. In 1889 the average value of the silver dollar 
was $0.'72 in gold. Any one may compute the nominal 
amount but not the consequence, of paying all these deposits 
at a discount of twenty-eight per cent. 

It may be good law to say that all these deposits can be 
paid in something cheaper than that deposited, if before such 
payment the cheaper money has been made a legal tender, — 
but to do it is contrarj^ to Deuteronomy. In such case, per- 
haps, it would be a smart thing to say to some poor woman 
who had her little store of wealth deposited in a savings 
bank, that, as to money the law of Moses was not in force in 
this country, but that the doctrine here was, the devil take 
the hindmost. 

^' I . 

PAPER MONEY. 

This kind of money is preferred for common use and to 
pass from hand to hand. It is easier to carry, count and con- 
ceal than specie, is not subject to the objections of bulk, 
weight and wear, and when propeily made is more difficult to 
•counterfeit and tamper with than coin. No one desires to 
<?arry about with him any more specie than a sufficient quantity 
of small change. The chief objection to paper money is its 
liability to abuse; its manufacture is too easy, and the proper 
limit to its quantity is too easily forgotten or disregarded. 

The legitimate demand for paper money is not a demand 
for more money, but for that kind because of its superiority 
for common use over coin, as above mentioned. If coin is 
-deposited in the Treasury and coin certificates taken in lieu 
of the specie, the demand for such paper money is a proper 
one. And the demand that about one-half of the currency 



AMERICAN MONEY. 115 

shall be in pa-peris proper enough. And if silver dollars are 
to become the standard coins and the people prefer to lodge 
the silver in the Treasury and use treasury notes in its stead, 
such preference is a reasonable one. But any demand that 
money shall be made abundant and cheap by excessive issues 
of bills of credit, is absurd and dangerous. The lesson taught 
by over issues of Continental money during the Revolution, 
and of other kinds of paper money since, ought to be worth 
something. 

During the Revolution paper money was a necessity; but 
there was found to be a limit to the amount which would cir- 
culate, although these drafts upon the future were backed by 
unlimited patriotism. Both the Continental Congress and 
the several colonies emitted bills of credit to very large 
amounts. In the absence of cash the colonies fought the 
mother country jointly and severally on credit. Overissue 
destroyed the value of the money. 

After the adoption of the Federal constitution, it was very 
generally supposed that paper money was entirely prohibited. 
It was provided therein that " no State shall coin money, 
emit bills of credit, make anything but gold and silver a ten- 
der in payment of debts, or pass any law impairing the obli- 
gation of contracts ;" and no express power was conferred 
upon Congress to do any of these things, except " To coin 
money, regulate the value thereof, and of foreign coins, and 
fix the standard of weights and measures.'' 

A written constitution is construed according to its legal 
import and so as to give effect to the intention, not of its 
framers, but of the people in adopting it. And if it were in- 
tended by its makers that the Federal constitution should pro- 
hibit the issue or use of paper money entirely, the necessary 
Avords were not inserted in the instrument. For it was very 
shortly afterwards adjudged and held, that bank notes issued 
under National as Avell as State authority were not prohibited, 
and finally, that Congress could emit bills of credit and make 
them lawful money and a tender in payment of debts. Paper 
money, like coinage, was a great invention; and it was not its 
use but its abuse which needed prohibition. 

In 1Y91 the first United States bank was incorporated with 
a capital of ten millions, and to continue twenty years. Sub- 
scription by individuals were to be paid one-fourth in specie 



116; AMERICAN money;.;, 

and. three-fourths in public stocks bearing interest. The gov- 
ernment vyas to subscribe for one-fifth of the stock to be paid 
in cash, and the amount reloaned to the government payable 
in ten annual instalments. There wes no money in the treas- 
ury to pay for this stock, and it was paid for as follows: Bills 
were drawn on the American ('ommissioners for loans in Am- 
sterdam for the two millions^ and which were purchased by 
the bank; the money thus realized was at once used to pay 
for the bank stock; whereupon the bank loaned to the govern^ 
ment two millions to be repaid as above by delivering to its 
treasurer the above drafts, which had been nominally dis- 
counted at the bank. This neat way of paying for bank stock 
was very generally practiced afterwards by those who sup- 
plied the couatry with a currency. They discounted their 
notes at the banks which they had created for an amount suf- 
ificient to pay for their stock subscriptions. 

State banks were also established everywhere with a nomi- 
nal capital, in the aggregate to a very large amount. A bank 
in those days meant a bank of issue; it was a piece of ma- 
chinery organized for the purpose of issuing paper money. 
There was a currency panic in 1809; thq business had been 
overdone. The Farmers' Bank of Gloucester, Rhode Island, 
when investigated by a committee of the legislature was 
found to have in circulation $580,000 in notes, and available 
assets for their redemption to the extent of $84. 6*7. Othei* 
banks in New England were no better. 

The banks south of New England suspended in 1814. In 
Philadelphia, the notes of the city banks depreciated twenty 
per cent, and those of the country, banks from twenty to fifty, 
per cent; fractional parts of a dollar were sujDplied by smali 
notes and tickets of banks, corporations and individuals. 

With the exception of a second United States bank incor- 
porated in 1816 with a capital of thirty-five millions, to con- 
tinue twenty years, and which failed in 1839 with its stock a 
total loss, the State banks furnished the paper money and con- 
trolled the currency of the country until the outbreak of the 
late civil war. 

In 1816, when the bill to incorporate the second United 
States bank was pending, Mr. Calhoun said in the House: 
"There has been an extraordinary revolution in the currency 
of the country. By a sort of undercurrent, the power of Con- 



AMERICAN MONEY. 117 

gress to regulate the money of tlie country lias caved in and 
upon its ruin has sprung up these institutions which now exer- 
cise the right of making money in and fur the United States. 
For gold and silver are not the only money, but whatever is 
the medium of exchange and sale, in which bank paper alone 
was now employed and had become the money of the coun- 
try. A change great and wonderful has taken place, which 
divests you of your rights and turns you back to the Revolu- 
tionary war, in which every State issued bills of credit, which 
were made a legal tender and were of various values. We 
have in lieu of .gold and silver, a paper medium unequally and 
generally depreciated, which affects the trade and industry of 
the nation: which paralyzes the national arm, and which sul- 
lies the faith, both public and private, of the United States.'^ 

And he further stated that the banks had one hundred and 
seventy millions in circulation, and not over fifteen millions 
in specie for its redemption. 

Up to 1816, the mint had coined in gold (eagles, half and 
quarter eagles), and in silver, (dollars, halves, quarters, dimes 
and half dimes, as follows: 

■ Gold -t 5,610,957.50 

Silver dollars 1 ,439,517.00 

Fractional silver coins 6,175,111.50 

Total 113,225,586.00 

Any other specie then in the country must have consisted of 
foreign coins. 

The country went into the war of 1812 with a currency con- 
sisting of State bank paper. Washington was taken by 
a small invading force and the public buildings, including the 
capitol, were burnt, and insolvency com23elled peace without 
honor, except on the water and finally at New Orleans. 
When Mr. Calhoun said the State bank paper had jjaralyzed 
the national arm, he evidently referred to events then fresh in 
the minds of his hearers. 

Mr. Benton says (Thirty Years, etc., vol. 1, p. 1): "The 
Grovernment struggled and labored under the state of the 
finances and currency and terminated the war without any 
professed settlement of the cause for which it began. There 
was no national currency — no money, or its equivalent, which 
represented the same value in all places. The first Bank of 



118 AMERICAN MONEY. 

the United States ceased to exist in 1811. Gold, from being 
undervalued, had ceased tO be a currency — had become an 
article of merchandise, and of export — and was carried to 
foreign countries. Silver had been banished by the general 
use of bank notes, had been reduced to a small quantity in- 
sufficient for a public demand; and besides would have been 
too cumbrous for a national currency. Local banks over- 
spread the land; and upon these the federal government, 
having lost the currency of the constitution, was thrown for 
a cui-rency and for loans. They, unequal to the task, and hav- 
ing removed their own foundations by banishing specie by 
profuse issues, sank under the double load of national and 
local wants, and stopped specie payments — all except New 
England, which section was unfavorable to the war. Treasury 
notes were then the resort of the federal government. They 
were issued in great quantities; and not being convertible into 
coin at the will of the holder, soon began to depreciate. In 
the second, year of the war the depreciation had become 
enormous, especially towards the Canada frontier, where the 
war raged and where money was most wanted. Au officer 
setting out from Washington with a supply of these notes, 
found them sunk one-third by the time he arrived at the 
Northern frontier. After all, the Treasury notes could not 
be used as a currency, neither legally nor in fact; they 
could only be used to obtain local bank paper, itself greatly 
depreciated. All government securities were under par, even 
for depreciated bank notes. Loans were obtained with great 
difficulty, at large discount, almost on the lender's own terms; 
and still attainable only in depreciated local bank notes. Im- 
pressment was the object — the main one, with the insults and the 
outrages connected with it — and without which there would 
have been no declaration of war. The treaty of peace did not 
mentionor allude to the subject. * * But the glorious ter- 
mination of the war did not cure the evil of a ruined currency 
and defective finances, nor render less impressive the financial 
lesson which it taught. A return to the currency of the con- 
stitution — to the hard money government which our fathers 
gave us — no connection with banks — no bank paper for federal 
uses — the establishment of an independent treasury for the 
federal government; this was the financial lesson which the 
war tauorht." 



AMERICAN MONET. 119 

But the lesson was not heeded. The issue of State bank 
paper went on; and there was another combined credit and 
currency panic in 1819-20, followed by general insolvency. 

In Ex-Gov. Ford's History of Illinois it is said that " in 
1818 the whole people of the State numbered about forty -five 
thousand souls." * * " Such a thing as regular com- 
merce was nearly unknown. Until 1817, everything of foreign 
growth or manufacture had been brought from New Orleans 
in keel boats, towed with ropes or pushed with poles, by the 
hardy race of boatmen of that day, up the current of the 
Mississippi; or else wagoned across the mountains from Phila- 
delphia to Pittsburg, and from thence floated down the Ohio 
to its mouth in keel boats. Upon the conclusion of the war of 
1812 the people from the old States began to come in and 
settle in the country. They brought some money and prop- 
erty with them, and introduced some changes in the customs 
and modes of living. Before the war, such a thing as money 
was scarcely ever seen in the country, the skins of the deer 
and raccoon supplying the place of a circulating medium. 
The money which was now brought in, and which had before 
been paid by the United States to the militia during the wai% 
turned the heads of the people, and gave to them new ideas 
and aspirations, so that by 1819 the whole country was in a 
rage for speculating in lands and town lots. The States of 
Ohio and Kentucky, a little before, had each incorporated a 
batch of about forty independent banks. The Illinois Terri- 
tory had incorporated two at home, one at Edwardsville and 
the other at Shawneetown; and the Territory of Missouri 
added two more at St. Louis. These banks made money very 
plenty; emigrants brought it to the State in great abundance. 
The owners of it had to use it in some way; and as it could 
not be used in legitimate commerce, the most of it was used 
to build houses in towns which the limited business of the 
country did not require, and to purchase land which the labor 
of the country was not sufficient to cultivate. This was called 
"developing the infant resources of a new country." The 
United States government was then selling land at two dollars 
per acre: one-fourth in cash, with a credit of five years for the 
residue. For nearly every eighty dollars in the country, a 
quarter section of land was purchased; and the notes of most 
of the numerous banks in existence were good in the public 



120 AMERICAN MONEY. 

land offices. The amount of land thus purchased was in- 
creased by the general expectation that the rapid settlement 
of the country would enable the speculator to sell for a high 
price before the expiration of the credit. This great abun- 
dance of money also made a vast increase in the amount of 
merchandise brought into the State. When money is plenty, 
every man's credit is good. The people dealt largely with 
the stores on credit, and drew upon a certain fortune in pros- 
pect for payment. Everyone was to get rich out of the future 
emigrant. The speculator was to sell him houses and lands: 
the farmer was to sell him everything he wanted to begin 
with and live upon until he could supply himself. Towns 
were laid out all over the country and lots were purchased by 
every one on credit; the town maker received no money for hi& 
lots, but he received notes of hand, which he considered to be 
good as cash: and he lived and embarked in other ventures as 
if they had been cash in truth. In this mode, by the year 
1820, nearly the whole people were irrecoverably involved in 
debt. The banks in Ohio and Kentucky broke, one after 
another, leaving the people of those States covered with in- 
debtedness and without the means of extrication. The banks 
at home and in St. Louis ceased business. The great tide of 
emigrants failed to come. Real estate was unsaleable; the 
lands purchased of the United States were unpaid for and 
likely to be forfeited. Bank notes had driven out specie, and 
when these notes became worthless, there was no money of any 
description left in the country. The people began to sue one 
another for their debts; and as there was absolutely no money 
in the country, it was evident that scarcely any amount of 
property would pay the indebtedness. To remedy these evils, 
the Legislature of 1821 created a State bank. It was founded 
without money and wholly on the credit of the State. It 
was authorized to issue one, two, three, five, ten, and twenty 
dollar notes in likeness of bank bills, bearing two per cent, 
annual interest and payable by the State in ten years. It was 
directed by law to lend its bills to the people to the amount of 
one hundred dollars on personal security; and upon the secu- 
rity of mortgages upon land for a greater sum. These bills 
were to be receivable in payment of all State and county 
taxes and for all costs and fees, and salaries of public officers: 
and if a creditor refused to endorse on his execution his will- 



AMERICAN ilONKY. 121 

ingness to receive them in payment of tlie debt, tlie debtor 
could stay its collection for three years by giving personal 
security. So infatuated were this legislature with this absurd 
bank project, that the members firmly believed that the notes 
would remain at par with gold and silver. As an evidence of 
this, the journals show that a resolution was passed, request- 
ing the Secretary of the Treasury to receive these notes into 
the Land offices in payment for the public lands. When this 
resolution was put to the vote in the Senate, the old P'rench 
lieutenant governor, Col. Menard, presiding over that body, 
did up the business as follows: "Gentlemen of the Senate, it 
is moved and seconded dat de notes of dis bank be made land 
office money. All in favor of dat motion, say aye; all against 
it say no. It is decided in the affirmative. And now gentle- 
men, I bet you one hundred dollar he never be made land 
office money." In the summer of 1821 the new bank went 
into operation. The directors w^ere all politicians; and were 
then, or expected to be candidates for office. Lending to 
everybody, and refusing none, was the surest road to popular- 
ity. Accordingly, three hundred thousand dollars of the new 
money was soon lent without much attention to security or 
care for -eventual payment. It first fell twenty-five cents, 
then fifty and then seventy cents below par. As the bills 
of the Ohio and Kentucky banks had driven all the money 
out of the State, so this new issue effectually kept it out. 
Such a total absence was there of the silver coins, that 
it became utterly impossible, in the course of trade, to make 
small change. The people from necessity were compelled to 
out the new bills into two pieces, so as to make two halves of 
a dollar. This again further aided to keep out even the 
smallest silver coins, for the people must know that good 
money is a very proud thing, and will not circulate, stay or 
go where bad money is treated with as much respect as good." 
In 183*7 there Avas another combined credit and currency 
panic, the effects of which lasted for about ten years. To take 
the State of Illinois for illustration, the condition of the State 
in 1842 was (Ford's History) "The treasury of the State was 
indebted for the ordinary expenses of government to about 
$313,000. Auditor's warrants were selling at fifty percent, 
discount and there was no money in the Treasury whatever, 
not even to pay postage on letters. The treasury was bank- 



122 AMERICAN MONEY. 

rupt. A debt of fourteen millions had been contracted for 
the canal, railroads and other purposes. The currency of the 
State had been annihilated: there was not over two or three 
hundred thousand dollars in good money in the pockets of the 
whole people. They were indebted to the merchants, nearly 
all of whom were indebted to the banks or to foreign mer- 
chants, and the banks owed everybody and none were able to 
pay." 

The bankrupt act of 1841 settled a large part of the debts 
of the whole country. 

State Bank money continually proved to be a failure. It 
rested upon no secure foundation and had only a local circu- 
lation. It never furnished a national currency equally good 
throughout the whole country. When the issues of a State 
wandered too far away from home it sank to a discount and 
became uncurrent. Excessive issues crowded out and kept out 
the specie, and when confidence in the paper money was lost 
a curren(;y panic was the consequence. Whereupon there was 
no money and a credit panic followed and everybody was in- 
solvent or bankrupt. No State could make its bank issues a 
tender for the payment of debts. Hence the resort to valuar 
tion, appraisement and stay laws,which as to past transactions 
were also invalid. 

A United States bank could furnish a national currency.- 
But it was justly regarded as a huge monopoly dangerous to 
republican institutions. The charter of the first one expired 
in 1811 and was not renewed. The charter of the second one 
expired in 1836 and became thereafter a State bank and failed 
in 1889. Its capital of thirty-five millions of dollars was a 
total loss, of which the United States owned and lost one- 
fifth. The public revenue collected in one district in State 
Bank paper current there, was not available for expenditure 
elsewhere. .And in 1840, Congress passed "An act to provide 
for the collection, safe keeping and disbursement of the public 
money," and thereby divorce the National treasury from the 
State banks. After the election of Harrison and Tyler this 
act was repealed, and an effort made to establish a third 
United States bank. Harrison having died, an act passed for 
the purpose met with a veto from Mr. Tyler. And this finally 
^nded the scheme of a great national bank. In 1846, another 
act was passed in Congress entitled " An act for the better 



AMERICAN MONEY. 123 

organization of the Treasury, and for the collection, safe- 
keeping, transfer, and disbursement of the public revenue." 
By this act it was provided that on and after January 1, 1847, 
all duties, taxes, sales of public lands, debts, and sums of 
money accruing or becoming due to the United States should 
be paid into the Treasury in gold or silver or in Treasury 
notes issued under the authority of the United States; and 
that on and after April 1, 1847, all payments were to be made 
in gold and silver, or in Treasury notes, if the creditor saw fit 
to take them. This closed the Treasury to bank notes, until the 
creation of the present national bank system in 1863, under 
which the notes of such banks are receiv^able for all public 
dues and demands due to the United States, except duties on 
imports. Upon any enlargement of that system, the govern- 
ment in case of war,would find its Treasury encumbered with 
the inconvertible issues of these banks and be reduced to a 
condition similar to that experienced in the war of 1812, 
The provision requiring a holder to present the notes of a 
national bank in multiples of $1,000 at the United States 
Treasury, or otherwise to present the same at the counter of 
the bank during business hours, and if unpaid to protest the 
notes, make report to the Comptroller and wait thirty days 
for him to take action in the premises is similar to modes 
adopted earlier in favor of State banks to enable them to evade 
payment. At one time in Georgia, one who presented a bank 
note for payment was required to make oath in the bank be- 
fore a justice of the peace that the note was his own and that 
he was not the agent of another, and also make the same oath 
before the cashier and five of the directors, at a total cost of 
$1.37^ on each note. 

A bank of issue lends its own notes without interest for the 
notes of its customers bearing interest. This constitutes its 
profit: its notes are issued for private gain, and not for the 
public benefit. And it is prompt to make its debtors pay with 
interest and costs; but it seeks to evade the payment of its 
own notes. It, therefore, finds means to scatter them 
broadcast and as far away from home as possible. If thev 
never find their way back so much better for the bank. In 
times past, the bank which always continued to pay its notes 
on demand or finally paid them in full was the exception. 
The present national banks suspended payment upon their de- 



124 AMEKICAX MONEY. 

posits in 1873. From their inception until January 1, 18Y9, 
they never redeemed their notes at all. In 1873, Gen. Grant, 
then President, thought that they ought to be compelled to 
redeem their notes at least in greenbacks. 

Some time after State banks had monopolized the field of 
circulation, the notion began to prevail that banking ought to 
be free: that instead of certain banks having a monopoly, 
everybody ought to be allowed to issue paper money. In 
1854 a free banking system adopted in Indiana went to pieces 
and the holders of the notes suffered great loss. 

In 1857 there was another crisis and suspension of specie 
payments, the effects of which continued until the civil Avar in 
1861. 

In the fall of 18G0, Mr. Lincoln was elected President, and 
thereupon the Southern States attempted to secede from the 
Union, and to that end combined as the Confederate States 
under a provisional constitution, February 8, 1861. At that 
time the banks of the State of Illinois, organized under a free 
banking system, had nearly twelve millions of dollars in 
paper in circulation, mostly secured by deposit of bonds is- 
sued by the Southern States. Secession destroyed the value 
of these bonds. The banks were numerous, small, and gen- 
erally located in out of the way places with a view to incon- 
vertibility. The total specie held by them amounted to only 
$302,905. As the bonds declined in value, so did the money; 
and the people lost the greater part of the face value of the 
notes and were left without a currency. The prostration was 
complete. Deposits, if paid at all, were worth little in such 
bank paper. The token theory of money, failed to work in 
this case. The doctrine that money may be composed of 
mere tokens or counters to pass from hand to hand as a me- 
dium of exchange seems to require a general and permanent 
delusion that the money possesses intrinsic value, or else the 
bottom drops out. 

Mr. I/incoln, having become President on March 4,1861, on 
April 16, 1861, issued a call for seven ty-tive thousand men 
and also for a special session of Congress, to meet July 4, 
1861. On July 17, 1861, a loan of two hundred and fifty 
millions was authorized, pursuant to which Mr. Chase, then 
Secretary of the Treasury, sold at par one hundred millions of 
Treasury notes bearing seven and three-tenths per cent, inter- 



AMEBICAX MONEY. 125 

€St, and payable three years after date; also, fifty millons of 
six per cent, twenty year bonds at ten per cent, discount, and 
also issued fifty millions of demand notes receivable for cus- 
toms and all public dues. 

The battle of Bull Run was fought in July, 186], and the 
Union army defeated. During the summer the Union forces 
were largely increased, and on July 22, 1861, the President was 
authorized to accept volunteers not exceeding five hundred 
thousand men to serve not over three years. Thus vast ex- 
penditures became necessary, and how to meet them was the 
problem. 

Mr. Chase, in his report of December 9, 1861, said: The 
circulation of the banks outside of the rebellious States was 
about one hundred and fifty millions of dollars, the whole of 
which constituted a loan without interest from the people to 
the banks, costing them nothing except the expense of issue 
and redemption, and the interest on the specie kept on hand for 
the latter purpose; that the value of the existing bank circula- 
tion depended upon the laws of thirty-four States and the 
character of some sixteen hundred private corporations and 
was actually furnished in greatest proportions by institutions 
of the least capital; that under such a system, or lack of sys- 
tem, great fluctuations and heavy losses in discounts and 
exchanges were inevitable and not infrequently through failure 
of the issuing institutions considerable portions of the circu- 
lation became suddenly worthless in the hands of the people. 
And he thought. Congress under the power to tax, regulate 
commerce, &c., possessed ample authority to control the credit 
circulation, which enters so largely into the transactions of 
commerce and affects in so many ways the value of coin, and 
that in his judgment, the time had arrived when Congress 
should exercise this authority. And he proposed two plans: 
one for the gradual withdrawal from circulation of the notes 
of private corporations, and the issue, in their stead, of 
United States notes, payable in coin on demand, in amounts 
sufticient for the useful ends of a representative currency; the 
other, to prepare and deliver to institutions and associations, 
notes prepared for circulation under national direction and to 
be secured as to prompt convertibility into coin by the pledge 
of United States bonds and other needful regulations. He 
said that the first plan had been already partially adopted by 



126 AMERICAN MONEY. 

the issue of demand notes; that it might be extended so as to 
reach the average circulation of the country while a moderate 
tax, gradually augmented, on bank notes would relieve the 
national from the competition of local circulation; that the 
substitution of a national for a State currency upon this plan, 
would be equivalent to a loan to the Government without in- 
terest, except on the fund to be kept in coin, and without ex- 
pense, except the cost of preparation, issue and redemption; 
while the people would gain the additional advantage of a 
uniform currency and a relief from a considerable burden in 
the form of interest on debt. 

The principal features of the second plan Avere: a circulation 
of notes bearing a common impression and authenticated by 
a common authority; the redemption of these notes by the 
associations and institutions to which they may be delivered 
for issue; and the security of that redemption by the pledge 
of United States stocks and an adequate provision of specie. 
In this plan, the people, in their ordinary business, would find 
the advantages of uniformity in currency and security, of ef- 
fectual safeguard, if the same is possible, against depreciation; 
and of protection from losses in discounts and exchanges. 
While in the operations of the Government the people would 
find the further advantages of a large demand for government 
securities, of increased facilities for obtaining the loans re- 
quired by the war, and of some alleviation of the burdens on 
industry through a diminution in the rate of interest, or a 
participation in the profits of circulation, without risking the 
perils of a great money monopoly. 

And he favored the latter plan, because it would avoid the 
evils of a great and. sudden change in the currency by offering 
inducements to solvent existing institutions to withdraw the 
circulation issued under State authority and substitute that 
provided by the authority of the Union. And thus through. 
the voluntary action of the existing institutions, aided by wise 
legislation, the great transition from a currency heterogeneous, 
unequal, and unsafe, to one uniform, equal, and safe might be 
speedily and almost imperceptibly accomplished. 

And he thought no argument was necessary to establish 
that the power to regulate commerce and the value of coin 
included the power to regulate the currency of the country or 
the collateral proposition that the power to effect the end in- 



AMERICAN MOXEY. 127 

eludes the power to adopt the necessary and expedient 
means. 

When a hard money man and a strict constructionist saw 
the integrity of the Union menaced by a rebellion of colossal 
magnitude, his loyalty enabled him to perceive powers in the 
constitution not clearly seen before. In his opinion also, the 
time had arrived to put an end to an heterogeneous, unequal 
and unsafe currency composed of bank notes issued under 
State authority and to adopt a national currency. The State 
bank paper which, in the war of 1812, had "paralyzed the 
national arm and sullied the faith, both public and private, of 
the United States" had lived long enough. In the crisis of 
1861, the men at the helm did not intend to allow the national 
cause to be swamped by State bank money. 

On December 31, 1861, all the banks in the country, still 
solvent, suspended specie payments, and the United States 
Treasury followed suit. And thus the idea of United States 
notes " payable in coin on demand " and National bank notes 
"secured as to prompt convertibility into coin" passed, as to the 
coin part of it, into limbo. The specie in the country hardly 
sufficed to pay duties on imports. The fight had to be made 
on credit. It w^as difficult to pay interest in specie where the 
public securities required it. 

The Secretary proposed to nationalize the currency; the 
Avhole State bank system being in favor of State rights, was 
opposed to it, and they were violently opposed to all irredeem- 
able paper money except their own. The offer of the national 
bank system under national control failed to placate banks 
whose issues were under less control. 

The confederate banks of Boston, New York, and Phila- 
delphia, as champions of State rights, and representatives of 
a mob of broken and suspended State banks, sent a powerful 
lobby to Washington to oppose the schemes of the Secretary. 
Their plan was, no legal tender notes and no more demand 
notes; the government to become one of their customers and 
keep its deposits with them, checking out the money as occa- 
sion might require; bonds to be issued and sold for wdiatever 
they might bring,with power in the Secretary to hypothecate 
bonds as security for loans which, if not paid at maturity, the 
bonds might be sold to the highest bidder. All the banks in 
the States of Massachusetts, New York and Pennsylvania then 



128 AMERICAN MONEY. 

liad a circulation of about sixty-six millions of dollars, and 
this they could not redeem. Yet these petty banks proposed 
to reduce the Government in such an emergency to the condi- 
tion of a beggar at their doors. The public debt on Decem- 
ber 1, 1861, was about two hundred and sixty-seven millions; 
on October 31, 1865, it was $2, 8o8, 545,437. 55. Victory had 
been won by the fore part of May, 1 865, at which time there 
was a navy of 530 vessels of all kinds, armed with 3,000 guns 
and manned by 51,000 men, and an army of 1,000,516 men- 
All of these were paid off and- mostly discharged by October 
31, 1865. In view of these figures, the impudence of these 
small State banks was gigantic. Their plan failed and their 
officers went home, not to pay their suspended paper, but to in- 
iiate it. These banks never resumed specie payments. 

Necessity compelled the Government to emit bills of credit 
in the form of Treasury notes during the war of 1812. They 
were not' in a form suited to circulate as money; but were 
receivable for all public dues,were fundable into public stock, 
and generally bore interest. A promise to pay money to A 
oi- order after a time limited or on demand with interest, was 
thought to be quite as lawful and valid as any part of the 
bonded debt. And finally it was seen that a promise to pay 
the bearer a certain sum on demand without interest, was 
equally valid. This left but one more step, and that was to 
make the Treasury note lawful money and a legal tender. 
This was done in the greenback and the power to do it was 
found in the constitution by the Supreme Court, as chiefly 
implied in the power to borrow money; so that the National 
Oovernment now carries both the purse and the sword. 

Although Mr. Chase favored his National bank scheme, the 
logic of events compelled the issue of United States notes. 
The first issue of one hundred and fifty millions was author- 
ized February 25, 1862. At this time. United States 6 per cent, 
bonds were selling at twelve per cent, discount in suspended 
bank paper. The greenback is a promise to pay dollars with- 
out saying when. At the time of its issue it meant payment 
in specie when the Government was able; and the people 
made it able. Ever since January 1, 1879, it has meant pay- 
ment in gold on demand with every facility offered to get the 
coin. The total amount authorized, was four hundred and 
fifty millions, and part of this was in lieu of the demand notes 
and a part used as a reserve to pay temporary loans. 



AMERICAN MONEY. ] 29 

The State banks again appear in the Treasury reports.: Mr^ 
Fesscnden, then Secretary, in his report of December 6, 1864, 
says: The necessities of former years have led to many ex- 
pedients, as is apparent from the diversity of forms which 
our securities present. As the debt increases from year to 
year borrowing becomes more difficult, embarrassed as the 
country is with two systems of banking and obstructed as the 
Government is by a currency wholly beyond its control, it is 
manifest that to push its own circulation far, if at all, beyond 
its present limit could only be justified by extreme necessity. 
He says also, the returns on file show that the whole circula- 
tion of the State banks on January ], 1864, was $169,916,129. 
The total amount issued to National banks to November 22, 
1864, was ^65,160,210. The diminution of State bank issues 
deducted from the National bank issues left an increase of 
over twenty-one millions of dollars in bank circulation during 
the year. And after stating his necessities he further says: 
Under these circumstances, the Secretary thought it advisable 
in order to meet pressing emergencies to borrow upon bonds 
or notes authorized by the different acts referred to, fifty mil- 
lions of dollars of the banks of the cities of New York, 
Philadelphia and Boston, and met the representativesof a 
large number of thepe institutions in New York. The result 
proved, however, that notwithstanding a professed, and as the 
Secretary was convinced, a reasonable desire to aid the Gov- 
ernment, these institutions were not able to furnish the as- 
sistance required upon any terms which under existing pro- 
visions of law the Secretary felt authorized to accept. 

These were the banks who felt able to manage the whole 
Avar debt. They had inflated their suspended paper and yet 
were unable to take a loan of fifty millions on any lawful terms. 
At that time the State and National banks were reaping a profit 
on their circulation of not less than fourteen millions of dol- 
lars annually. It was crowding to the wall the Treasury 
issues. It was choking the channels of circulation to the 
prejudice of the National cause. Every artifice had been used 
to keep down inflation by the issue of interest bearing paper, 
such as 7.bO notes, six per cent, compound interest notes, cer- 
tificates for temporary loans and certificates of indebtedness 
bearing six per cent, interest. The times were critical. Sher- 
man was fighting Johnson among the mountains of Georgia. 



130 AMERICAN MONEY. 

Orant was fighting Lee on the road to Richmond. Gold in 
July, 1864, was 12.85; this price indicated great inflation and 
portended impending collapse. Now it is plain, that if the 
suspended bank paper then in circulation had not existed, its 
place could have been occupied by the United States notes 
and the inflation would have been no greater. This would 
have put into the Treasury about two hundred millions of ad- 
ditional funds, and that too bearing no interest. The inflated 
and suspended bank note paper imperilled the national cause 
On September 1, 1864, Sherman took Atlanta. The back of 
the rebellion was broken none too soon. The nation was 
fighting for life and was forced to fight on credit and pay 
high rates of interest. At the same time, these suspended 
banks were stufling the volume of the currency with their ir- 
redeemable paper for private gain. Any bank can suspend 
payment when its interest requires it and feel no shame; but 
it required the cheek of Judas to do it and also inflate in a 
great national crisis involving the country's fate. 

According to the report of the Secretary of the Treasury 
iov 1889, the bank note circulation on June 30, of each year 
during the war was as follows: State banks, in 1862, |183,- 
792,079; in 1863, $238,677,218; in 1864, $179,157,717; in 1865, 
#142,919,638. Of National banks, in 1864, $31,235,270; in 

1865, $146,137,860. 

The National banks were an injury instead of a benefit. 
The bonds required to start them soon reappeared in the cir- 
culation as paper money. None existed until 1864. The 
people took the first five hundred million loan of six per cent, 
bonds in the summer of 1863 at par in paper, equivalent to 
nearly seventy-two cents in gold. This National bank paper 
which, according to the original scheme of Mr. Chase, was to 
be "secured as to promj)t convertibility into coin by the 
pledge of United States bonds and other needful regulations," 
Avas convertible into nothing, unless greenbacks. These banks, 
assisted the State banks in stuffing the volume of the cur- 
rency and depreciating the value of the United States notes. 

The State bank system lived through the war as a fungus 
and parasite. A part were finally induced to change over to 
the National bank system and the remainder were taxed out 
of existence by a tax suflicient for the purpose first levied in 

1866. The act of July 13, 1866, provided that every National 



AMERICAN MONEY. 131 

banking association, State bank or State banking association 
shall pay a tax of ten per centum on the amount of notes of 
any person, State bank, or State banking association used for 
circulation and paid out by them after the first day of August, 
1866. This act was held valid upon the ground that it was 
not a direct tax in the sense in which those words are used in 
the constitution. Veazie Bank vs. Fenno, Collector, 8 Wall. 
533. And this act, enlarged so as to include all notes of any 
town, city or municipal corporation issued for circulation, is 
still in force, and is all that stands in the way of local issues 
everywhere by persons and corporations acting under State 
authority. And a clause for the repeal of this act is said to 
be inserted in some political platforms. 

In the above case, decided at the December term, 1869, Mr. 
Chase, then Chief Justice, said: "It cannot be doubted that 
under the constitution the power to provide a circulation of 
coin is given to Congress. And it is settled by the uniform 
practice of the Government and by repeated decisions, that 
Congress may constitutionally authorize the emission of bills 
of credit. It is not important here to decide whether the 
quality of legal tender in payment of debts can be constitu- 
tionally imparted to these bills (since held that it could): it 
is enough to say that there can be no question of the power of 
the Government to emit them, to make them receivable in 
payment of debts to itself, to fit them for use by those who 
see fit to use them in all the transactions of commerce, to pro- 
vide for their redemption, to make them a currency uniform 
in value and description and convenient and useful for circu- 
lation. These powers until recently were only partially and 
occasionally exercised. Lately, however, they have been 
called into full activity, and Congress has undertaken to sup- 
ply a currency for the entire country." * * * * 
*****" Having thus, in the exercise of 
undisputed constitutional powers, undertaken to provide a cur- 
rency for the whole country, it cannot be questioned that 
Congress may constitutionally secure the benefit of it to the 
people by appropriate legislation. To this end. Congress has 
denied the quality of legal tender to foreign coins, and has 
provided by law against the imposition of counterfeit and 
base coin on the community. To the same end Congress may 
restrain by suitable enactments the circulation as money of 



132 AMERICAX MONEY. 

any notes not issued under its authority. Without this 
power, indeed, its attempts to secure a sound and uniform 
currency for the country must be futile." 

In his report in 1861, as Secretary of the Treasury, Mr. 
Chase said: "It has been well questioned by the most eminent 
statesmen whether a currency of bank notes, issued by local 
institutions under State laws, is not, in fact, prohibited by the 
National constitution. Such emissions certainly fall within 
the spirit, if not within the letter, of the constitutional pro 
hibition of the emission of ' bills of credit ' by the States, 
and of the making by them of anything except gold and sil" 
ver coin a legal tender in payment of debts." The power to 
regulate the value of money requires control over the volume 
of the currency as well as over the standard or money unit. 
And since it is now settled that Congress has the power to 
provide a currency, of both coin and paper, for the whole 
country, it perhaps remains for some future Supreme Court to 
reverse the doctrine that bank bills or other paper money 
issued under State authority are not bills of credit in a 
constitutional sense. If silver had been as abundant and 
cheap at the adoption of the Federal constitution and after- 
wards as it was before the passage of the recent act for the 
purchase of silver, perhaps no such absurd doctrine would ever 
have obtained any foothold. But in those days a bank meant 
a paper mill, and the people were poor and destitute of both 
gold and silver, and having nothing else out of which to 
make money, they made it out of paper. And the right to 
issue paper money both as to State banks and a National bank 
being established, the profit to be realized out of the issue of 
paper money induced every State to enter into competition in 
cramming the volume of the currency with the notes of insti- 
tutions so located and distributed as to prevent as far as pos- 
sible any demand for specie upon the notes. By this means 
the specie was continually driven out, and the inflation being 
overdone, there would be a collapse, hard times, general in- 
solvency and no money. No State could make its paper 
money a legal tender: therefore, when all devices to evade 
payment of the notes had been exhaiisted and specie had 
risen to a premium general distrust took the place of confi- 
dence and a combined currency and credit panic became a 
financial cyclone which swept everything before it and left 
nothing but ruin and poverty behind. 



AMERICAN MONEY. ■ 133 

The value of money could not be vegulated bv Congress- 
while every State was allowed to authorize persons and cor- 
, porations to inflate the currency with paper money without 
restraint. The relation between the standard and the volume 
of the currency, and the importance of the kind of money 
and the quantity, were not perceived, or if so, were entirely 
disregarded. And the wealth accumulated during prosi)eritY 
was continually swept away by subsequent adversity caused 
by bank failures and general financial collapse. The power to 
regulate money and its value is one of the most important 
functions of government. " There is no contract, public or 
private, no engagement, national or individual, which is unaf- 
fected by it. The enterprises of commerce, the profits of 
trade, the arrangements made in all the domestic relations of 
society, the wages of labor, pecuniary . transactions of the 
highest and the lowest, the payment of the National debt, 
the provision for the national expenditure, the command which 
the coin of the smallest denomination has over the necessaries 
of life, are all affected by it." . 

The great rebellion compelled the national autliority to as- 
sume control of the currency and finally exercise its power to 
regulate the value of money. This has led to a much better 
system than ever existed before. 

The National free banking system is better than the State 
bank system which preceded it. But any reasons which may 
have existed in time past for bank notes have ceased to exist. 
The power of the people to provide themselves with a cur- 
rency directly issued out of the National treasury has become 
fully established. And the delegation of the power to regu- 
late the value of money to banks of issue, free or otherwise,, 
is not justifiable under National or State authority. No per- 
son or corporation ought to be permitted by issues of paper 
money to tamper with the currency and dilute it for private 
gain and public loss. Banks of issue and bogus mints should 
be alike prohibited. Even if banks could supply the legiti- 
mate demand for paper money, and never abuse the trust, 
there is no more reason for delegating that function of gov- 
ernment to private individuals than any other one vested in 
the State for the public benefit. Experience proves that its 
delegation has caused periodical calamity to the country. 
Eurthermore, all profit on the use of paper money belongs to 



134 AMERICAN MONEY. 

the people; and it is as great a fraud upon them to grant it 
away to private individuals and corporations as to vote to them 
annually, millions of dollars out of the public treasury as a 
mere gratuity. 

The proper office and function of a bank is to reduce the 
circulation, and not increase it. There are certain things 
which relieve money from work, such as checks, bills of ex- 
change, book accounts, promissory notes, etc. These, com- 
bined with the effects of steam and electricity, reduce the 
amount of money which would be otherwise required. Now 
in applying all the facilities for doing business which have 
been, or may be, invented, a bank finds its proper place. It 
receives deposits payable on demand; and there is a book ac- 
count between the depositor and the bank. Any one who has 
bills or notes discounted, is paid in a book account also. All 
the customers leave their money with the bank, and from 
time to time, as occasion may require, pay their debts by 
checks. The payees deposit them in the same or some other 
bank. Thus taking all the banks of a city as one concern 
very little money in fact passes. The great mass of transac- 
tions are settled through a clearing house, by an adjustment 
of mutual accounts. A further extension of this method 
makes great financial centers clearing houses for great dis- 
tricts of country: New York being the chief centre for this 
country, and London for the British Empire and indeed for 
the whole world. The average daily clearings in New York 
during 1889 were 1114,839,820 upon which balances paid in 
money were only five per cent. The exchanges through the 
clearing houses of the United States for the year ending 
September 30, 1889,was 154,494,754,586, of which about 8 
per cent, was paid in money. As compared with the sum 
total of transactions, the amount of money moved is re- 
duced by the agency of banks to a mere nominal sum. 

Bank deposits, other than savings, are payable on demand, 
and in ordinary times a large part of such deposits can be 
safely used in discounting time paper. But in a credit panic 
and a run on such a bank by its depositors it would be com- 
pelled to suspend, although entirely solvent. Somebody 
would be compelled to wait until the bank could realize upon 
its investments. This it could do in a reasonably short time, 
if the money were good, for somebody would have it. But if 



AMERICAN MONET. \-4o 

the currency were bank paper, than a bank of issue would re- 
quire means sufficient to redeem its notes as well as to pay its 
depositors. If the money itself were not beyond the reach 
of distrust, then a panic could culminate into a fright about 
the money itself (a currency panic), as well as a fear that it 
might not be forthcoming in payment of depositors and other 
debts (a credit panic). 

Formerly the people were kept too poor by panics and re- 
vulsions to have any large sums of money, and banks 
were too much distrusted to obtain any large amount of de- 
posits. Therefore, they relied upon their issue of bank notes 
as their principal source of profit. The Second Bank of the 
United States,when it was at its highest point of confidence, 
and with a capital of thirty-five millions of dollars had on 
November 1, 1834, notes in circulation to the amount of $15,- 
968,731.90 and private deposits to the amount of only $6,741,- 
752.24. After it had ceased to be a United States bank and 
was operating under a State charter, but still retaining its 
original capital, it had notes in circulation to the amount |36,- 
620,420 and deposits to the amount of 12,194,281. In con- 
trast with, this bank and its many branches, take one National 
bank. According to the report of the Comptroller of the 
Currency for 1889, the Fourth National Bank of New York, 
with a capital of $3,200,000 and a circulation of $180,000, had 
124,745,989.83 in deposits. And according to the same re- 
port, State banks with no circulation had individual deposits 
to the amount of $473,484,147. In England, a bank was 
originally a bank .of issue, and such is the Bank of England 
now; and it is continually see-sawing with its issues, as gold 
is exported or imported, and it has been compelled to suspend 
three times since its reorganization in 1 844, which was in- 
tended to make it a financial Gibralter. It declares dividends 
of some six or seven per cent, per annum,while sundry deposit 
banks in London declare dividends two or three times as 
great. 

The true bank of this day desires no circulation of its own, 
nor any bank issues at all. It needs the soundest currency 
possible. Then, if well conducted, it acquires a great credit 
and its fortune is made. Its deposits furnish it with an 
ample source of reveinie. The bank of issue which expects 
to make its living by tampering with the currency and bor- 



136 AMERICAN MONEY. 

rowing money from the public without interest upon its notes 
has no right to exist. 

The average circulation of the State and National banks 
from 1862 to 1890 was over three hundied millions of dollars. 
If they had not existed and their place had been supplied 
with United States notes, the paper inflation Avould have been 
no greater during the war and the resumption of specie pay- 
ments afterwards would have been quite as easy. The limit 
of inflation which a suspended paper currency will bear was 
being rapidly approached in 1864; and it is quite evident that 
the risk of financial collapse would have been less if the sus- 
pended issues of the State banks had been taxed out of ex-" 
istence immediately after 1861 and no National banknotes 
had ever been issued. By using the above additional amount 
of their own notes as money during the above period, instead 
of bank notes, the people would have saved, counting interest 
at four per cent, per annum, payable quarterly and com- 
pounded, over five hundred and seventy-five millions of dol- 
lars. But the Secretary of the Treasury in 1861 feared the 
hostility of the State banks and hoped in vain to propitiate 
them by an offer of the national free banking system: and his 
hope was equally vain to conduct a war of such great magni- 
tude upon a cash basis with a quite nominal amount of 
specie. The suspension of specie payments shortly after the 
date of his report, and which continued for eighteen years, 
left the money question in this form. Shall the war be con- 
ducted on suspended bank notes, or United States. notes, or of 
the two combined? and the latter was the one adopted, with 
the result that the bank issues proved to be an incubus which 
had to be carried ever afterwards. In the war of 1812 bank 
notes "paralyzed the national arm and sullied the faith, both 
public and private of the United States." In the great re- 
bellion, susperded bank notes carrit d the currency well on 
towards the point of a total financial collapse and hazarded 
the safety and perpetuity of the Union. 

The friends of State bank paper always favored a strict 
construction of the constitution and abhorred a United States 
bank with branches or in any form. But the civil war over- 
threw State rights as represented by paper money issued under 
State authority, and developed the fact that it could be law- 
fully taxed out of existence. Both of these paper money 



AMEKICAN JLONEY. 137 

schemes died liard. It is to be hoped that the present Na- 
tional banking system is in the thi-oes of a final dissolution, 
as the last representative of paper money issued for private 
gain. 

At the end of the war Mr. McCuUoch was Secretary of the 
Treasury: lie was a great friend of banks and hated a 
greenback as much as a friend of State bank paper ever hated 
a United States bank note He had previously been con- 
nected with the State bank of Indiana, which could by its 
charter issue several dollars in paper for one of specie in its 
vaults (actually or theoretically). And he had opjDosed the 
National bank system; but being made Comptroller of the 
Currency he became its promoter. Afterwards as Secretary 
of the Treasury, in his report of December 4, 1865, he said: 
The reasons sometimes urged in favor of United States notes 
as a permanent currency are the saving of interest and their 
perfect safety and uniform value. The objections to such a 
policy are that the paper circulation of the country should be 
flexible, increasing and decreasing according to the require- 
ments of legitimate busiiless, while if furnished by the govern- 
ment it would be quite likely to be governed by the necessities 
of the Treasury or the interests of parties rather than the de- 
mands of commerce and trade. And he was urgent to have 
power given to him to sell six per cent, bonds for the purpose 
of retiring the greenbacks and was in fact authorized to retire 
ten millions within six months ending October 12, 1866, and 
thereafter at the rate of four millions per month. At this 
«ame time there was interest-bearing paper outstanding, all 
due within two years, amounting to over twelve hundred mil- 
lions of dollars, of which eight hundred and thirty millions 
were notes bearing seven and three tenths per cent, interest 
and over one hundred and thirty millions bearing six per cent, 
interest then due or payable on ten days' notice. In his anxiety 
to restore specie payments by retiring greenbacks, he forgot 
the issues of suspended bank paper then extant, of which 
there was at that time sixty-five millions of old State bank 
notes still afloat; they probably belonged to the "flexible" 
part of the currency. 

According to him, it was not safe to trust the Treasury or 
the people with the control of the currency, but such control 
ought to be vested in banks with power to make the currency 



138 AMERICAIS MONEY. 

flexible, expanding and contracting as in former times when 
panics were periodical. The officers of such banks, forsooth, 
would make the currency fluctuate according to the require- 
ments of legitimate business: they would not discount a note, 
no matter how well secured, if the money was to be used for 
speculation, — of course not: they never did I ! 

This "flexible" doctrine used in favor of banks of issue is 
totally refuted by the facts. The currency for a number of 
years past has consisted of coin, coin certificates, a fixed 
amount of greenbacks and a declining amount of National 
bank notes. And money was never before so abundant or 
interest so low. In times past when banks of issue con- 
trolled the currency, they kept tension enough on the so- 
called "elasticity" to maintain high rates of interest at all 
seasons of the year. This is the banking idea of a proper 
elasticity. An elastic and palpitating currency is no more 
needed than an elastic and variable standard. 

Mr. McCuUoch, in his report as Secretary, of December 5, 
1866, expressed regret that he had not been allowed to redeem 
greenbacks faster, and said: The increase of National bank 
circulation has kept pace with the decrease of United States 
notes which, as legal tender, he called a false and demoralizing 
standard. He was not unmindful of the saving which re- 
sulted to the government by the use of its own currency, but this 
was more than overcome by the discredit arising from failing 
to pay the notes according to their tenor and its bad influence 
on the public morals. This objection to greenbacks on ac- 
count of their immoral tendency sounds well, corning from 
an advocate of State banks who had not redeemed their notes 
since 1861 and of a National bank system which had never 
redeemed its notes at all. It never seemed to occur to the 
Secretaiy that his administration through the Treasury of a 
National free banking system of suspended and inconvertible 
bank notes had an immoral tendency. The withdrawal of 
the bank notes would have restored specie payments as fast 
as the withdrawal of greenbacks. He was mindful of the 
saving to the people by the use of tlieir own notes; but he was 
more mindful of bank inflation. After the floating debt was 
all funded except the greenbacks, that false and demoralizing 
standard rapidly approximated towards gold. And by May 
31, 1878, the use of greenbacks had so corrupted the public 



AMKItlCAN 3I0NEY. ] :^9 

morals that pursiiaDt to a loud call to that effect it was at 
that date enacted, that thereafter it should not be lawful for 
the Secretary of the Treasury or other otticer to cancel or 
retire any more United States notes and M'hen any were re- 
deemed or received they should be reissued and kept in circu- 
lation. Their amount then was, and still is, 346,681,016. 

Hereafter the Government can furnish all the money 
needed, both the coin and paper. The sooner the national 
bank notes are eliminated from the currency the better; it 
will be one step towai'd a more simple money system. And 
it is quite apparent from the foregoing short summary of past 
financial history that banks of issue, whether State or National 
under a free banking or any other system, are both useless 
and dangerous. If the people are determined to have infla- 
tion, the government printing offices can furnish a sufficient 
supply of paper money: private assistance is not at all neces- 
sary. If the people see fit to wreck the currency it is better 
for them to do it with their own notes. Some time or other, 
the relation existing between the money unit and the quantity 
of money will be fully understood and regarded. 

For the present, the programme actually adopted is paper 
money backed by silver as well as the public faith. Such a 
currency has a natural limit. The objections to it are a 
probable change of standard, and overloading the treasury 
with such a vast amount of silver. 



TWO ESSAYS 



IN 



ECONOMICS 



BY 



JOHN BORDEN 



CHICAGO. 

S. A. MAXWELL & CO. 

• 134-140 Wabash Ave. 

i8qo. 



013 722 214 




